This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bank Stocks Hammered: Italian Uncertainty Losers

NEW YORK ( TheStreet) -- Morgan Stanley (MS - Get Report) was the loser among the largest U.S. banks on Monday, with shares sliding 7% to close at $22.03.

The Dow Jones Industrial Average (^DJI) and S&P 500 (SPX.X) Index saw 2% declines, while the NASDAQ Composite (^IXIC) was down over 1%, as investors worried that the uncertain outcome of elections in Italy could lead to a coalition government and a possible reversal of the country's previous austerity measures.

The KBW Bank Index (I:BKX) was down 3% to close at 53.02, with all 24 index components showing declines.

Shares of Bank of America (BAC - Get Report) declined 4% to close at $11.03. Citigroup (C - Get Report) was also down 4%, closing at 41.15.

In the only major U.S. economic release on Monday, the Federal Reserve Bank of Texas said that "Texas factory activity expanded in February, the Texas production index declined to 6.2 from 12.9 in January, suggesting "growth continued but at a slower pace."

The Dallas Fed said "other measures of current manufacturing activity also indicated slower growth in February. The new orders index was positive for the second month in a row, although it fell from 12.2 to 2.8."

Morgan Stanley

Shares of Morgan Stanley have returned 15% this year, following a 28% return during 2012. The shares trade for 0.8 times their reported Dec. 31 tangible book value of $26.81, and for 8.7 times the consensus 2014 earnings estimate of $2.53, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $2.10.

The renewed uncertainty in the market on Monday underlines investors' concern over Morgan Stanley's risk to "peripheral" European countries, including Greece, Ireland, Italy, Spain, and Portugal. This exposure totaled $6.3 billion as of Dec. 31, with Italy representing $3.2 billion in credit risk.

The company saw a sharp improvement during 2012, with earnings from continuing operations (excluding debit valuation adjustments) of $3.055 billion, or $1.59 a share, compared to a net loss of $136 million, or eight cents a share, in 2011. Adjusted net revenue rose to $30.514 billion in 2012 from $28.555 billion in 2011. The 2011 bottom line was lowered by several "strategic actions," including the conversion of preferred shares in Mitsubishi UFJ Financial Group to common shares, and a settlement with MBIA (MBIA). Each of these items cost the firm $1.7 billion.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $15.78 0.57%
C $51.40 0.67%
MS $32.36 0.00%
AAPL $112.07 0.68%
FB $93.34 0.58%


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs