analyst at Deutsche Bank Alex. Brown, who said they offer an opportunity at their current price, but not for the faint of heart.
Implicit in owning a company such as Chase should be the belief that the global markets will continue to grow, said analyst George Bicher in a report to clients. Furthermore, investors should make peace with the view that market-sensitive revenues will be more volatile than traditional net interest income - although growing much faster.
In trading Thursday, Chase shares fell $1.1875, to $75.75.
Mr. Bicher said he sees trading moderating this quarter, given the light market volume so far. He also said the recent volatility in the interest rate swap markets could hurt trading results for Chase.
But the banking company is solidly positioned on the investment banking side, benefiting from the trend among corporations of buying investment and advisory services from the same provider.
Mr. Bicher said banks benefit from bundling because it streamlines due diligence.
The business flows at Chase should be viewed as sustainable, despite the effect from a downturn in the business cycle, Mr. Bicher said.
This reflects Chase's strong market position in leverage lending, cross-selling internally developed products, and the establishment of a team-oriented culture.
The market-sensitive nature of Chase's favorable revenues will continue to draw questions as to volatility,'' Mr. Bicher said. We believe the perceptions regarding volatility are very much legitimate regarding private equity gains and trading revenues.
Bank stocks rallied early Thursday, as bargain-hunting investors came into the market.
This could be a trading rally off of the carnage of the last couple of weeks, said Kevin Timmons, a banking analyst at First Albany Corp. I can't say stocks have absolutely bottomed out, but the valuations are compelling,'' Mr. Timmons said.
But in the afternoon, the rally petered out, and banks ended the day mixed.
The Standard & Poor's bank index was down 1.21%. The Nasdaq bank index gained 0.06%.
The Dow Jones industrial average added 0.01%, while the S&P 500 fell 0.29%.
Some bank stocks extended Wednesday's gains. J.P. Morgan & Co.'s shares were up 46.25 cents, to $127.50, PNC Bank Corp.'s, 50 cents, to $450.75, and Citigroup's $1.1875, to $44.
One of the big gainers for the day was BB&T Corp. Shares in the Winston-Salem, N.C., banking company were up 87.5 cents, to $35.4375, on strong volume.
Analysts could not point to a specific reason for the interest in the stock, but they hold the company in high regard.
BB&T is very good at small-business banking, middle-market banking, and community banking,'' said Lori Appelbaum, a banking analyst at Goldman, Sachs & Co. She said BB&T tends to build market share faster than other companies.
Losers included Bank of America Corp., off $1.125, to $60.625, KeyCorp, off 31.25 cents, to $29.5625, and Bank One Corp., off $1.4375, to $51.125.
