Bank stocks were mixed Friday as investors reacted to uncertainty about the future of Lehman Brothers Holdings and Washington Mutual Inc. as independent companies.
The KBW Bank Index fluctuated throughout the day, closing up 1.27% but ending the week down 3.52%.
Amidst rumors of a possible sale of Lehman Brothers to either Bank of America Corp. or a consortium of private firms, the Treasury Department reportedly signaled Friday that it is reluctant to back a deal financially. Lehman fell 13.5%; Bank of America rose 2.1%.
"I suppose there's some measure of relief that Lehman Brothers is going to be wrapped up in some way or another," Sean Ryan, an analyst at Sterne, Agee & Leach Inc., said in an interview. "But the reality is, this is a multiyear credit cycle and maybe we're halfway through it, and we're not going to be out of it just yet because Lehman Brothers gets resolved."
Investors also reacted to news reports on Washington Mutual. The Seattle thrift company released a midquarter update late Thursday touting its liquidity and capital positions and predicting that its third-quarter loss provision would be smaller than last quarter's. On Friday sources said Wamu's new chief executive, Alan Fishman, was negotiating a deal with JPMorgan Chase & Co. executives, though it remained unclear whether an agreement would be struck.
Washington Mutual closed down 3.5%. JPMorgan Chase also fluctuated before closing down 1.2%.
Investors were also digesting negative economic news, as the Commerce Department reported Friday that retail sales fell 0.3% in August. Economists had expected a 0.3% increase.
The broader markets were also mixed throughout the day; the Dow Jones industrial average closed off 0.1%; but the Standard & Poor's 500 index closed up 0.21%.
Gainers include BB&T Corp., 3.7%; Zions Bancorp., 11.5%; Capitalsouth Bancorp in Birmingham, Ala., 19.5%; and AmericanWest Bancorp in Spokane, 14.1%
Decliners include Citigroup Inc., 3.5%; BankUnited Financial Corp. in Coral Gables, Fla., 14.3%; and Liberty Bell Bank in Cherry Hill, N.J., 11.1%.