This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Trust and Custody Banks: Financial Winners

NEW YORK ( TheStreet) -- Trust and custody banks were the winners among the nation's largest financial names on Monday.

Shares of State Street of Boston were up over 2% to close at $61.67, while Bank of New York Mellon was up nearly 2% to close at $28.82 and Northern Trust of Chicago was up over 1% to close at $55.11.

The broad indices ended mixed, after the Census Bureau reported Monday that retail sales rose 0.1% in April after falling by a revised 0.5% in March. The consensus estimate among economists polled by Thomson Reuters was for retail sales to fall 0.3% in April.

The Census Bureau also said manufacturers' and trade inventories during March were rose by 0.1% during March from February. Economists had expected inventories to increase by 0.3% during March.

The KBW Bank Index (I:BKX) was up 0.4% to close at 58.79, with all but four of the 24 index components showing gains for the session.

"We're seeing the green shoots of spring," for the trust and custody banks, according to BernsteinResearch analyst Brad Hintz, who says that the trust banks are a play on the rising fortunes for asset managers.


"It appears that the retail investors in North America are slowly embracing more risk," Hintz says. "That is leading to money flowing into the asset managers, which is a pretty good tail wind for the trust banks."

With continued evidence of sustained economic growth, although some recent economic reports have been more positive than others, investors also see the trust banks as a play on rising interest rates. "We have the trust banks all still marked as 'market perform,' but on the other hand, it certainly is looking up for the group," Hintz says, adding that "they should do very well when rates ride."

The prospect of significantly higher rates weighed on the shares of large mortgage real estate investment trusts. Shares of Annaly Capital Management (NLY - Get Report) were down over 2% to close at $14.73, while American Capital Agency (AGNC - Get Report) was down over 3% to close at $29.05.

Both REITs feature very high dividends, as the companies borrow at record low short-term rates, while making leveraged investments in long-term mortgage backed securities, much of which was purchased at significant discounts.


1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AGNC $20.32 -0.66%
BK $43.39 1.10%
NLY $10.15 -0.88%
NTRS $74.75 0.96%
STT $78.15 1.30%

Markets

DOW 18,076.16 +64.22 0.36%
S&P 500 2,111.58 +1.98 0.09%
NASDAQ 5,088.3920 +11.8680 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs