UBS economist Maury Harris early on Thursday forecast the unemployment claims number would be little changed and also that the Federal Reserve Bank of Philadelphia's index of regional factory activity would increase to a reading of 5.0 for April from 2.0 in March. A reading above zero indicates expansion. The Philadelphia Fed later announced that the index reading for April was just 1.3. "The indicator for overall activity remained slightly positive this month," the bank said in a statement "but other broad indicators were mixed. Indicators for new orders and employment were weaker this month." The consensus among economists is for the Philadelphia Fed's index of current activity to come in at 3.3.
The KBW Bank Index ( I:BKX) was down 1% to 54.20, with 17 of the 24 index components showing afternoon declines, including Bank of America ( BAC), which was down over 2% to $11.44, following a 5% decline on Wednesday.
Morgan StanleyMorgan Stanley early on Thursday reported first-quarter earnings from continuing operations -- excluding debit valuation adjustments -- of $1.177 billion, or 61 cents a share, compared to $1.343 billion, or 71 cents a share, in the first quarter of 2012. Net revenues excluding DVA were $8.457 billion in the first quarter, increasing from $7.477 billion the previous quarter, and $8.902 billion a year earlier.
The Global Wealth Management unit's revenue increased 4% sequentially and 5% year-over-year, to $3.470 billion in the first quarter. Atlantic Equities analyst Richard Staite said in a note to clients that Morgan Stanley's first-quarter results were actually "broadly in line" with estimates, since they included a tax benefit of $142 million, or 7 cents a share. Please see TheStreet's earnings coverage for a full rundown of Morgan Stanley's first quarter, along with analysts' reaction. Morgan Stanley's shares have returned 6% this year, following a 28% return during 2012. The shares trade for 0.7 times their reported March 31 tangible book value of $27.39, and for 8.0 times the consensus 2014 EPS estimate of $2.54. The consensus 2013 EPS estimate is $2.10. MS data by YCharts
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Bank of AmericaShares of Bank of America were down again on Thursday following a 5% decline on Wednesday, after the company announced disappointing first-quarter results. Bank of America on Wednesday reported a first-quarter profit of $2.6 billion, or 20 cents a share, increasing from $732 million, or 3 cents a share in the fourth quarter, and $653 million, or 3 cents a share, in the first quarter of 2012. The fourth quarter reflected $2.5 billion in costs for independent foreclosure reviews, and $2.7 billion in charges related to the company's mortgage putback settlement of a long-term dispute with Fannie Mae ( FNMA). Bank of America's first-quarter revenue totaled $23.7 billion, increasing from $22.5 billion a year earlier, and coming in ahead of the consensus estimate of $23.41 billion. The Fannie Mae settlement led to a great reduction in the outstanding mortgage repurchase claims against Bank of America. Investors' mortgage repurchase claims against the company totaled $28.3 billion as of Dec. 31. Bank of Americas fourth-quarter earnings presentation implied that the Fannie Mae settlement would reduce the putback claims by roughly $12.2 billion, leaving about $16.1 billion in claims.
Bank of America said its litigation expenses totaled $881 million during the first quarter, compared to $916 million the previous quarter and $793 million a year earlier. First-quarter litigation expenses included $500 tied to a settlement of a class action suit by mortgage-backed securities investors against Countrywide, which Bank of America acquired in 2008. Credit quality continued to improve, with first-quarter net loan charge-offs of $2.517 billion, declining from $3.104 billion the previous quarter and $4.056 billion in the first quarter of 2012. The first-quarter annualized ratio of net charge-offs -- excluding impaired purchased loans, which had previously been written down -- to average loans improved to 1.14%, from 1.40% the previous quarter and 1.80% a year earlier. Sterne Agee analyst Todd Hagerman has a neutral rating on Bank of America, and said in a note to clients on Thursday that the bank's legacy mortgage-related expenses were "a stubborn sore spot."
Interested in more on Bank of America? See TheStreet Ratings' report card for this stock. -- Written by Philip van Doorn in Jupiter, Fla. Follow @PhilipvanDoorn >Contact by Email.