While the broad indexes saw slight increases for the session, the KBW Bank Index (I:BKX) pulled back 1% to close at 39.60, with 19 out of 24 index components seeing declines.
Economic news was mixed. The Conference Board said that its measure of consumer confidence for December was 64.5, exceeding a forecast of 58.3 among economists polled by Thomson Reuters and improving from 55.2 in November. Meanwhile, there was a report of a continued overall decline in U.S. housing prices, with the S&P/Case-Shiller 20-city index of national home prices falling to 1.2% in October, far exceeding the 0.4% decline expected by economists polled by Thomson Reuters.
Morgan Stanley has been one of the more volatile names among the big banks this year, and was included last week among TheStreet's 10 New York Bank Stocks With Most Upside for 2012. Based on a revised consensus price target of $22.36, analysts polled by FactSet see 42% upside for the shares in 2012.Investors will see a messy fourth-quarter earnings report for the company, following Morgan Stanley's settlement with MBIA (MBI) over claims related to credit default swaps on commercial mortgage-backed securities, which will result in a $1.8 billion pre-tax charge. Richard Staite of Atlantic Equities estimated that Morgan Stanley would post a 51-cent fourth-quarter loss. Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock. Shares of Bank of America (BAC) declined over 2% to close at $5.48, after rising 8% last week. The stock continues to be the most heavily discounted among the largest U.S. banks, with shares trading at just 0.4 times their Sept. 30 tangible book value of $13.20, according to SNL Financial. Along with the regulatory onslaught being faced by all the major banks, investors are concerned about Bank of America's capital adequacy, as the company's Sept. 30 Tier 1 common equity ratio of 8.65% according to SNL, was the lowest among the "big four" U.S. banks.
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