Bank analysts held sway over the market Friday, as gloomy outlooks dragged down most bank stocks.
Keefe, Bruyette and Woods analyst cut earnings estimates on 19 regional banks by a median of 5.6%, as credit markets and residential mortgage markets continue to wreak havoc on banks profits. Shares of First Horizon (FHN - Get Report) fell $1.03, or 7% to close at $13.63, hitting a new 52-week low. First Horizon is facing mounting loss reserves as non-performing assets increase.
A JPMorgan Chase analyst cut his 2008 earnings estimates for Citigroup (C - Get Report), Bank of America (BAC - Get Report) and Wachovia (WB), sending the national banks downward. BofA shares fell 96 cents to $39.41. Shares of Wachovia fell $1.16, or 4.1%, to $27.21.Citigroup, like BofA and Wachovia, also faces further writedowns in the first quarter, the analyst wrote in the note. Media reports on Friday said Citi was preparing a $4.5 billion five-year note sale. The bank's shares, however, dipped only 28 cents to $24.08. Other national banks fell in tandem. Washington Mutual (WM - Get Report) plummeted $1.32, or 11.5%, to $10.17. In other banking news, Fifth Third Bancorp (FITB - Get Report) is the latest name to surface as a possible buyer for struggling National City (NCC). Fifth Third ticked up 16 cents to $22.71, while Nat City dropped another 80 cents to $8.99. The KBW Bank Index was down 2.2% to 82.46. The NYSE Financial Sector Index closed down 65.26 to 7,638.15. On the positive side, futures broker MF Global (MF) shot up for the second day in a row to $12.25, a gain of 6.8%. The Bermuda-based company is pursuing financing alternatives that could include the sale of a minority stake in the company or the issuing of longer-term debt, but not a full acquisition of the company, according to The Wall Street Journal. The firm has hired investment bank Lazard to help it with the process.