Bank stocks hit by negative news, downgrades of 3
NEW YORK (AP) — Shares of financial companies were pummeled Thursday by a spate of discouraging economic news and analyst downgrades of three of the biggest U.S. banks.
The financial sector was the second biggest loser in the Standard & Poor's 500 index, marking a 1 percent decline in the late afternoon.
The negative economic news also weighed on the broader market. The Labor Department reported that 382,000 people applied for unemployment benefits last week, more than economists had expected. When applications consistently top 375,000, it suggests that hiring is too weak to lower the unemployment rate.
In Europe, a gauge of European Union business activity declined to its lowest level in more than three years.
UBS analysts downgraded from "Buy" to "Neutral" a trio of Wall Street giants: Citigroup Inc., Goldman Sachs & Co. and Morgan Stanley.
Analysts Brennan Hawken and David Eads said they are "generally more cautious" on the financial sector overall. Banks have benefitted from recent actions by central banks — the Federal Reserve in the U.S. and the European Central Bank — aimed at keeping interest rates low, they noted. However, that support could be fleeting, the analysts said in notes.
Citigroup shares declined 23 cents, to $33.95 in late afternoon trading, coming off a low of $33.26 earlier in the session. Goldman Sachs shed $1.28, or 1 percent, to $117.74, after dropping as low as $116.24 earlier. Morgan Stanley gave up 33 cents, or 2 percent, to $17.23, after earlier changing hands as low as $16.84.
Elsewhere in the sector, Bank of America Corp. edged down 4 cents, to $9.25, JPMorgan Chase & Co. slipped 16 cents, to $41.18, and Wells Fargo & Co. fell 9 cents, to $35.17.