Banking stocks closed lower after a volatile session Tuesday after the release of mixed forecasts on employment and consumer spending. The KBW Bank index closed down 0.65%, at 44.30, after dipping as low as 43.90 in early morning trading.
Financial stocks and the overall markets fell after the Commerce Department said the U.S. economy grew less than first reported in the third quarter and consumer spending fell below forecasts. That news was tempered in the afternoon when the Federal Reserve released minutes from its closed-door policy meeting this month, showing that officials believe the economy will grow slowly while unemployment remains high through 2010. They also said interest rates would stay "exceptionally low" for an "extended period."
Frank Barkocy, the director of research at Mendon Capital Advisors, said this news "really didn't do too much" for financial stocks. Most large and regional banking stocks were flat to down, he said, while some smaller names benefited from the perception that they might get assistance from regulators to buy failed banks. The FDIC said Tuesday that its list of "problem" banks had jumped 33%, to 552.
"I think you are seeing more and more investors looking at who the players will be that will most likely benefit from the [Federal Deposit Insurance Corp.]-assisted transactions," he said.
He cited New Alliance Bancshares Inc., which rose 0.84%. People's United Financial Inc. rose 2.62%, after investors continued to react positively to its announcement Monday that it would buy the equipment finance provider Financial Federal Corp., Barkocy said.
Other winners for the day included U.S. Bancorp, up 0.76%, and PNC Financial Services Group Inc., 0.32%.
Other large and regional banking companies ended the day on a down note.
JPMorgan Chase & Co. fell 1.85%; Bank of America Corp., 1.17%; Wells Fargo & Co., 0.75%, and Citigroup Inc. 7 cents a share, to $4.21.
Fifth Third Bancorp was off 1.57%; SunTrust Banks Inc., 1.34%; Northern Trust Corp., 0.19%, and Huntington Bancshares Inc., 1.05%.
