Dow ticks up slightly as traders try to shake off bank credit concerns
The Dow Jones Industrial Average was little changed on Friday as traders tried to move past credit concerns that sparked a big sell-off in regional banks Thursday.
The Dow traded 14 points, or roughly 0.1% higher. The S&P 500 shed 0.3%, and the Nasdaq Composite lost 0.6%.
Stocks that led Thursday’s bank sell off were rebounding, as Wall Street defended the shares and traders bet any bad credit bets were one-offs and not part of a bigger crisis. Zions and Western Alliance disclosed bad loans over the last 48 hours, which sparked a big selloff in the stocks that eventually dragged down the whole market Thursday. Zion lost 13%, while Western Alliance tanked by 11% Thursday.
But Zions Bancorp climbed more than 2% Friday after receiving an upgrade from Baird, which said the drop in market value for the regional bank was out of proportion considering the size of loan losses it was potentially facing. Investment bank Jefferies, caught in the storm for its exposure to bankrupt auto parts retailer First Brands, was last up 3% after Oppenheimer raised its rating to outperform. Jefferies was down 11% Thursday.
Better-than-expected earnings Friday from Fifth Third Bancorp also assuaged worries, sending the stock higher by 2%. The bank’s profit jumped last quarter even after posting a jump in credit losses tied to exposure to bankrupt subprime auto lender Tricolor.
The Dow lost 300 points and the S&P 500 shed 0.6 on Thursday, fueled by the significant decline in bank stocks late in the session. The SPDR S&P Regional Banking ETF (KRE), which has been down for four straight weeks, lost more than 6% during the session. Uneasiness in the banking sector has grown after the recent bankruptcies of those two auto industry-related companies: Tricolor and First Brands.
The regional bank ETF was up by 0.3% early Friday.
Source : Cnbc.com
