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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank Stocks: Fed Timing Losers

NEW YORK (TheStreet) -- Most of the nation's largest banks saw shares slide on Wednesday, led by Capital One Financial (COF), which was down 2% to close at $67.93.

The broad indices all pulled back as trading volume remained light and investors continued to worry over the coming tapering of Federal Reserve bond purchases. As part of its monetary stimulus known as QE3, the Fed has been making monthly purchases of $40 billion in long-term agency mortgage-backed securities, as well as $45 billion in long-term U.S. Treasuries. Principal payments received from maturing securities are being reinvested, to keep the central bank's balance sheet expanding at a monthly pace of $85 billion.

The Federal open Market Committee has repeatedly said it will continue the securities purchases "until the outlook for the labor market has improved substantially in a context of price stability." Several presidents of Federal Reserve district banks on Tuesday and Wednesday indicated that a slowing of bond purchases was likely before the end of the year.

Federal Reserve Bank of Atlanta president Joseph Lockhart on Tuesday was quoted by Market News International as saying a slower pace of securities purchases could be announced at any of the three remaining FOMC meetings this year. The next meeting will be held on Sept. 17-18.

The market yield on 10-year U.S. Treasury bonds was actually down five basis points to 2.60% Wednesday afternoon. Investors have pushed the yield on the 10-year up from 1.70% since the end of April, in anticipation of a curtailment of Federal Reserve bond-buying.

The KBW Bank Index (I:BKX) was down 1% to close at 65.40, with all but two of the 24 index components ending with declines.

Shares of Bank of America (BAC) recovered from earlier losses, ending with a 1% decline to close at $14.53, after the Justice Department and Securities and Exchange Commission late on Tuesday charged the company with mortgage fraud.

Freddie Ladles More Government Gravy

Freddie Mac (FMCC) on Wednesday announced second-quarter earnings of $5.0 billion, increasing from $4.6 billion the previous quarter. Freddie also announced it would pay the U.S. Treasury a dividend of $4.4 billion in September. Freddie's shares were up a penny in late trading, to $1.40.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs