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Visa, Morgan Stanley: Financial Losers

NEW YORK (TheStreet) -- Thursday was a weak day for financial stocks generally, as the Financial Select Sector SPDR (XLF), a widely-followed exchange traded fund that tracks financials, fell 0.81%, versus a 0.47% fall for the Dow Jones Industrial Average.

Bank of America (BAC) shares fell by 2.21% to $8, Citigroup (C) dropped by 0.67% to $32.48 and JPMorgan Chase (JPM) was lower by 0.44% at $43.01. Goldman Sachs (GS)and Morgan Stanley (MS), meanwhile, fell by 1.93% and 4.04% respectively.

Morgan Stanley's decline came despite a positive report from Credit Suisse analyst Howard Chen, following a meeting between Chen and company COO Jim Rosenthal.

Chen left his estimates and price targets unchanged and his recommendation stayed at "outperform."

"We believe franchise restoration, healthier market conditions and the absence of new negatives from here could drive share price outperformance," he wrote.

Visa (V) shares were sharply lower as a strong earnings report Wednesday was overshadowed by a U.S. Justice Department investigation into the financial payments network's pricing strategy, announced Thursday. Shares finished the day down 4.96% at $116.34.

Janney Capital Markets analyst Thomas McCrohan wrote Visa's second quarter results "were positive in terms of revenues, margins, and EPS," but he remains neutral on the shares "given the decelerating trends in payment volumes, today 's announced inquiry by the Department of Justice into Visa's newly implemented fixed acquirer fee, and the uncertainty surrounding outstanding merchant litigation.

Another big loser Thursday was Prudential Financial (PRU), which saw its shares plunge 10.14% to $54.80 after what Sterne Agee analyst John Nadel called "a very disappointing earnings quarter."

"Core EPS of $1.34 was extremely disappointing vs. our $1.66 on same basis and will call into question the ability to recover momentum toward longer-term [return on equity] target," Nadel wrote.

The analyst cut his estimates and price target, but retained his "buy" recommendation in a report published ahead of Prudential's Thursday morning conference call.

-- Written by Dan Freed in New York.

Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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