Updated from 3:07 p.m. EDT
Bank stocks were mixed Tuesday, taking a pause from their recent run-up, as investors assessed the Treasury Department's latest plan to revive lending.
Wall Street bank
was among the winners the day after the Treasury Department provided long-awaited details of a
to help banks rid up to $1 trillion in toxic assets from their books. Morgan Stanley closed up 2.5% to $25.03.
Fortress Investment Group
added 18.2% to $2.47, as the alternative investment firm was seen as being able to take advantage of the government's cheap financing. The plan calls for private investors, including hedge funds, to buy up the bad assets. Meanwhile, the government will offer billions of dollars in low-interest loans.
While analysts largely believe the plan has merits and that removing troubled assets from banks' balance sheets is a key step in resolving the current financial crisis, many questions remain. Specifically, the level of private investor and bank participation is uncertain, wrote analysts at Fox-Pitt Kelton. Analysts also have noted that short covering, or the buying of stocks to cover misplaced bets that stocks would fall, played a large role in the surge in bank stocks over the past two weeks.
Yet the KBW Bank Index, which tracks 24 of the largest U.S. banks, slipped 7.4% Tuesday, as investors took profits following a huge rally Monday. The index has soared 58% since March 10.
shares were down 4.8% to $2.98, while
shed 9% to $26.27.
Bank of America
shares lost 7.8% to $7.19 and
shares lost 10.5% to $15.51.
shares finished down 1.6% to $110.10.
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