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Bank of New York Mellon: Shutdown Day 3 Loser

NEW YORK ( TheStreet) -- Bank of New York Mellon (BK - Get Report) was the loser among the nation's largest banks on Thursday, with shares sliding 1.6% to close at $29.98.

The broad indices all ended 1% lower, adding to the previous session's declines, after President Obama said late Wednesday that investors "should be concerned" about the federal government shutdown -- now in its third day -- and the possibility of a default by the U.S. Treasury if the federal debt ceiling is not raised soon.

The KBW Bank Index (I:BKX) ended 0.5% lower at 62.22, trimming earlier losses.

Economic news was mixed. The Department of Labor -- despite the government shutdown -- said initial unemployment claims for the week ended Sept. 28 rose to 308,000 from 307,000 the previous week. Economists polled by Thomson Reuters were expecting jobless claims to rise to 313,000. The four-week moving average declined to 305,000 claims from 308.750 the previous week.

The Labor Department on Wednesday said its monthly Employment Situation report -- which includes the national unemployment rate -- for September originally scheduled for release on Friday would be delayed "due to the lapse in funding" to the Bureau of Labor Statistics.

The Commerce Department's August factory report was scheduled for Thursday but was also delayed because of the shutdown. The Institute for Supply Management's non-manufacturing index for September came in at 54.4, declining from the previous month's revised reading of 58.6. Economists on average were expecting the non-manufacturing index reading to be 57.4. An index reading above 50 indicates economic expansion.

Rafferty Capital Markets analyst Richard Bove on Thursday expressed dismay at the muted public reaction to the possibility of a U.S. default on interest payments, which he blames on " financially challenged legislators."

In a note to clients, the analyst wrote that "The devastation to the United States would be so severe that it would take decades to recover from the Depression caused by a default and the attendant dumping of trillions of dollars of U.S. Treasury securities on the global financial markets."

Shares of Bank of New York Mellon have returned 18% this year, following a 32% return during 2012. The shares trade for 2.4 times their reported June 30 tangible book value of $12.41, and for 11.8 times the consensus 2014 earnings estimate of $2.54 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $2.29.
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