Bank stocks continued to slip Tuesday as investors mulled an uninspiring round of earnings reports.
The American Banker index of 225 banks slipped 1.08%, while the index of the top 50 banks fell 1.11%. Chase Manhattan Corp., which reports second-quarter results today, was hit harder than most: Its shares fell $1.09375, or 2.1% to $50.9375.
"I have no explanation except the general market weakness," said analyst Ronald I. Mandle of Sanford C. Bernstein in New York.
Diana P. Yates of A.G. Edwards & Sons of St. Louis said that many banks' shares have been up one day and down the next as earnings reports continue to come in. The release of consumer price data, which showed some signs of inflation, also might have influenced trading negatively, she said.
Eric R. Rothmann, an analyst at First Security Van Kasper of San Francisco said the 0.6% rise in the consumer price index did not worry people. "We have enough information to say that there will be no significant increase in interest rates this summer," he said.
Bank stocks will continue to drift lower in the days ahead as the market corrects for last week's rallies and reacts to earnings reports that indicate a poor outlook for the current quarter, Mr. Rothmann said.
"We are not seeing steady or good quality growth," he said. "There is nothing major to worry about." But he said he was adjusting his ratings and estimates for several banks. "I try to be as prudent as possible."
PNC Financial Services Group Inc.'s ratings went from "strong buy" to "buy," despite earnings that met expectations at $1.06 per share. Mr. Rothmann told investors he was adjusting his target price for the stock because he no longer foresees a 35% rise over the next three to six months. He said the stock will gain about 22% in the current quarter.
Mr. Rothmann praised PNC's strategy to "move away from lending towards more financial services." Net interest income fell 10% from the previous quarter, to $555 million, and core noninterest income rose 28%, he said. "Nonperforming assets were basically in line with trends over the past year"
"I like the company a lot," he said, blaming "system-wide concerns" for the slow stock performance. Shares of PNC gained 6.25 cents, or 0.12% to close at $50.50.
Mr. Rothmann said he will probably also lower the ratings on Firstar Corp., of Milwaukee, and that SouthWest Bank of Texas in Houston is "under review."