The broad indexes were mixed, after the U.S. Labor Department reported that initial jobless claims for the week ended March 24 declined by 5,000 to 359,000, from a revised 364,000 the previous week. While initial jobless claims were at their lowest level since April 2008, the good news was not enough to keep U.S. stocks from following European markets down, now on fears of over government deficits in Portugal and Spain, with both countries seeing sovereign debt yields climb recently.
The U.S. Treasury on Thursday said it had completed an auction of preferred shares held by the government for six banks that had received bailout assistance through the Troubled Assets Relief Program, or TARP. The Treasury sold $410.8 million in TARP preferred shares, netting about $362 million after expenses, for a loss to the government of $48.8 million.
However, in its statement, the Treasury added that it had "recovered $260 billion from TARP's bank programs through repayments, dividends, interest, and other income - compared to the $245 billion initially invested," so that "each additional dollar recovered from TARP's bank programs is an additional dollar of profit for taxpayers."The KBW Bank Index (I:BKX) pulled back over 1% to close at 49.58, with all 24 index components seeing declines, except for KeyCorp (KEY), which was flat, at $8.48. Morgan Stanley's shares have now returned 31% year-to-date, following a 44% during 2011. European fears may have been a contributing factor the Morgan Stanley's slide on Thursday, with the company reporting net exposure to Italian bonds of $4.9 billion as of Dec. 30, while net exposure to Spanish securities totaled $1.4 billion. Credit Suisse analyst Howard Chen last Friday reiterated his "Outperform" rating for Morgan Stanley, with a $26 price target, and while he expects the company to post operating earnings of 40 cents a share for the first quarter, he expects a messy quarter, with a bottom-line net loss of 41 cents a share, "entirely to the incorporation of $2.2 Bn [in debit valuation adjustment] losses." Morgan Stanley trades for nine times the consensus 2013 EPS estimate of $2.32, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.94. Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.
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