This Day On The Street
Continue to site
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

Big Banks Slide on Rate Jitters: Financial Losers

NEW YORK ( TheStreet) -- KeyCorp (KEY - Get Report) was the loser among the nation's largest banks on Wednesday, with shares down 2.4% to close at $10.48.

The broad indices saw a second day of 1% declines, as investors continued to worry over the timing and magnitude of the Federal Reserve's eventual slowdown of its balance sheet expansion.

The Fed has kept the short-term federal funds rate in a range of zero to 0.25% since late 2008. The Federal Open Market Committee has said repeatedly that it would be "appropriate" to keep the federal funds rate in this range until the U.S unemployment rate drops below 6.5%, assuming inflation is kept in check.

With the Department of Labor reporting Friday that the unemployment rate had increased to 7.5% in May from 7.4% in April, there seems no chance of the FOMC changing its policy on short-term rates at its next meeting on June 18-19.

But the Fed has also been making monthly purchases of $85 billion in long-term securities in an effort to hold long-term rates down. The market has anticipated a curtailment of bond-buying by the central bank, sending the yield on 10-year U.S. Treasury securities up 54 basis points from the end of April to 2.24% Wednesday afternoon.

The Mortgage Bankers Association early Wednesday said that the average rate for "conforming" 30-year fixed-rate mortgage loans increased to 4.15% from 4.07% the previous week. This was the highest average rate since May of 2012.

Conforming mortgage loans are those that meeting the basic underwriting and down payment requirements for immediate purchase by Fannie Mae (FNMA) or Freddie Mac (FMCC).

The MBA also said that despite the higher rates, mortgage loan applications were up. The adjusted Purchase Index increased 5 percent from the previous week, while the unadjusted Purchase Index increased 14 percent from the previous week and 6% from a year earlier.

In a note to clients early Wednesday, BMO Capital Markets economist Alex Koustas called the increase in mortgage loan applications "a bit of a bright spot after the index took a four week nose dive, dive, as mortgage rates hiked up nearly 50 bps on continued speculation of Fed tapering."
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FMCC $1.55 0.00%
FNMA $1.70 0.00%
KEY $12.29 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs