Washed-Up, but Not Yet Whupped

Financial Hoists

Even as the broader market reversed course in one of those afternoon flame-ups today, financial stocks got whupped again (Josey). Amid rumors it will miss earning estimates, Chase Manhattan (CMB Quote) fell 5.2%, while J.P. Morgan (JPM Quote) -- off its low but still down 1.3% -- was the Dow's leading laggard. The Philadelphia Stock Exchange/KBW Bank index shed 1.4% and is now 17% below its April 27 closing high of 934.80.

The Fed's two rate hikes this summer, the dollar's decline and the subsequent (and anticipatory) rise in bond yields are proffered as main factors in the financials' foibles. There's a debate about whether higher interest rates really still dramatically impact banks' bottom lines, but the perception is there. And like possession and the law everywhere else, perception is nine-tenths of reality on Wall Street.

Yet, lo and behold, some prognosticators have recently come out bullish on the group. ...