Bank stocks lead post-plunge bounce

Shares of Citigroup, Bank of America and Morgan Stanley climb despite Moody's credit downgrades. Eurozone leaders meet in Rome to address the debt crisis.

By TheStreet Staff Jun 22, 2012 9:10AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock) Updated at 12:25 a.m. ET


By Andrea Tse


Stocks were rising Friday after the previous session's deep sell-off as investors shrugged off Moody's downgrade of 15 major banks late Thursday.


The Dow Jones Industrial Average ($INDU) was up by 44 points at 12,617. The S&P 500 ($INX) was up by 4 points at 1,329. The Nasdaq Composite ($COMPX) was up by 15 points to 2,874.

 

Stocks suffered their worst single-day drop in three weeks Thursday as investors were spooked by a batch of gloomy global economic data, a bearish trading call by Goldman Sachs (GS) and disappointment over the outcome of the Federal Reserve's latest policy meeting.


On Thursday evening, Moody's downgraded 15 of the world's biggest banks.


Citigroup (C), Bank of America (BAC) and Morgan Stanley (MS) were among the banks that saw their credit ratings slashed as expected, yet their stocks rose in early trading Friday.


The Hong Kong Hang Seng index closed lower by 1.4%, and the Nikkei in Japan closed down 0.29%.


The FTSE in London was slipping by 0.88% and the DAX in Germany was declining by 0.98% as business confidence in the biggest eurozone economy fell to its lowest point in more than two years.


European leaders met in Rome on Friday to discuss a unanimous plan to bring relief to the eurozone debt crisis. One area of contention going into the meetings is the proposal to tax financial transactions and to have banks foot the bill for their own bailouts.


In Spain, independent audits indicate that the country's banks will, under duress, require up to 62 billion euros in financial support, below the earlier foreseen 100 billion euros in eurozone bailouts.


Friday's U.S. economic calendar is empty.


In corporate news, Monster Beverage (MNST) is being added to the S&P 500, replacing Sara Lee (SLE). Standard & Poor's expects the change to take place after the close on June 28. The change was prompted by Sara Lee's decision to spin off its international coffee and tea business to shareholders.

Shares of Darden Restaurants (DRI) fell after the company posted in-line earnings for its fiscal fourth quarter but came in slightly short on the top line.


Arch Coal (ACI) said after Thursday's close that it's laying off 750 employees, roughly 10% of its workforce. The company said it plans to reduce production at mining complexes in Appalachia because of a major downturn in demand for coal-based electricity.


Medtronic (MDT) said its board has approved a 7.2% increase in its regular quarterly cash dividend to 26 cents a share. The medical devices company said the dividend is payable on July 27 to shareholders of record on July 6.


Ryder Systems (R) lowered its fiscal-second-quarter outlook, citing weakness in its fleet management solutions business. The company now sees comparable earnings of 90 to 95 cents a share for the three months ended in June, down from a previous expectation for a profit of $1.07 to $1.12 a share.

 

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237Comments
Jun 22, 2012 9:27AM
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LOL..

A financial transaction tax to fund the banks own bailout...  Which was caused by them buying GOVERNMENT bonds, which are worth less or are going to default.  

Translated:  Lets have  the banks CUSTOMERS pay for the governments failed economics.

And they wonder why customers are causing runs on the banks...  LOL

Jun 22, 2012 9:45AM
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Gee the banks never got a downgrade before the great fall of 2008. How bad must things be now.

If we were down 250 yesterday over "Economic Worries" why are we having a rally today-did the worries and problems go away.

Oh yea- my prediction of Oil at $75 back in April is just about to be fulfilled. Great for the consumer-Bad for the economy.

Don't look for a real move upward until the First Wednesday in November- Bye Bye Barry!!

Jun 22, 2012 9:39AM
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unemployment- 8.0% +

underemployment- 14.0%+

enough said 

     O
ooOoo
Jun 22, 2012 9:33AM
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Bank shares spike despite Moody's credit downgrades  What the ?
Jun 22, 2012 10:00AM
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Obama is doing a really great job at a task many thought impossible.......making Bush Jr. look like a good president.....

On this date:

National Debt:
2000 - $5.7 trillion
2004 - $7.3 trillion
2008 - $9.9 trillion
2012 - $15.8 trillion

GDP
2000 - $9.5 trillion
2004 - $11.3 trillion
2008 - $13.9 trillion
2012 - $15.2 trillion

Debt as a % of GDP
2000 - 60.5%
2004 - 64.4%
2008 - 71.3%
2012 - 103.8%

Jun 22, 2012 9:52AM
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More stimulus both monetary or fiscal will not help the economy. The only way out is major, major restructuring of our economy. This will require very tough decisions no one is going to like. Socialism has ended, sorry socialist. 
Jun 22, 2012 9:40AM
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Both major parties still putting the well being (and by that, I mean keeping their lavish lifestyles safe) of the financial industry ahead of liberty.

Down the crapper we go.......
Jun 22, 2012 11:06AM
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down 250 + and up 50 is NOT A REBOUND!
Jun 22, 2012 9:46AM
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I had a website a few years ago and after 8 years I closed it down. I feared that my comments would start mass violence around the world. I know our governments need to be working for the people and not themselves but how do you get them to do that? Government employees simply make too much money and the base pay needs to come down. Until governments take a 30 percent cut in pay across the board like most of us have to do we will have fiscal uncertainties.
Jun 22, 2012 10:12AM
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Captain Obama the 5 forward underwater compartments are flooded and engineering feels the only  action left will be to abandon the ship.  What shall we tell the passengers?  Responding with a grim smile the Captain says ' Tell the band to play something more upbeat to keep them calm so it will appear all is well"

Jun 22, 2012 10:11AM
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Socialists (DNC) and many on this site think that the government can create/grow wealth. When in reality, all they can do is redistribute wealth – not create it. In order for the government to spend money, it has to first take it from somewhere else (borrow, tax, or print)… You cannot take $20 million from the economy and then get $21 million back. It simply does not work that way. Think about it… If that were the case, our problems would be solved. Liberals confuse this principle all the time. They forget that wealth is created by the free exchange of commerce between two parties. I have an acre of land (worth $5K to me) you have an idea to build something on that land that will make you $50K. You offer me 5K for the land, and go your way – we both benefit. The government gets a piece of that action in the form of taxes, and that funds their existence. However, you cannot artificially create the exchange above… It has to occur naturally.  

Jun 22, 2012 11:54AM
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In most instances, public employee pensions have been mismanaged and under-funded for decades.  As usual, this is a direct result of politicians having access to the cash.  The result? - some pension plans are only "solvent" based on expectations of 15% returns per year!!  Others require too much public funding and not enough from employee contributions.  A few years ago in NJ, you had teachers who contributed an average of $4500/year to retire after 28 years and collect $70k per year on average in pension benefits.  Show me an annuity where I can get this kind of guaranteed return and I'll sign up tomorrow.
Jun 22, 2012 12:31PM
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Right   banks credit is lowered and their stocks go up   damn     tell me thats not crazy
Jun 22, 2012 10:33AM
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Socialism doesn't work, bankruptcy is here. The party is over. The economy requires major, major restructuring. Its going to take a economic 4x4 on our heads to face this reality. That 4x4 is on its way.
Jun 22, 2012 10:04AM
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I might start a Website and see if I can bring the World to it's knees.....

 

Dreams of my Fathers......Hitler and Genghis are dead.....

 

What the hell are they teaching kids in schools nowdays ?

Jun 22, 2012 9:44AM
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WHOO-HOO! Everything is just Hunky Dorey!!! Looks like yesterday was nothing more than an anomaly...Yeah, right
Jun 22, 2012 10:38AM
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Tumble: your comment did not make much sense... Just because you are rich does not mean that you are favored by God, and just because you are poor does not mean that you are unfavored by God. I don't know why people confuse this very basic principle. The rich have a greater burden, because they are called to be good stewards of their money. Being a good steward does not mean just flushing it down the toilet and giving it all away... Money is rarely the solution to any problem and can actually be a detriment -- it can bring out the worse in people.
Jun 22, 2012 2:51PM
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Is there any doubt Hillary would have been a FAR BETTER PRESIDENT than "57 States"?
Jun 22, 2012 12:26PM
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The Medias are like Obama

They like to screw us up!

Jun 22, 2012 10:36AM
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well obama has us all on the bus to hell.....  3.5 years and clueless.  
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