BofA, AmEx Leads Slump of Lenders as Job Growth Stalls
Wells Fargo (WFC) & Co. and Bank of America Corp. led a slump in financial stocks after a surprise increase in the U.S. jobless rate stoked fears of a stalling economy.
Wells Fargo, the biggest U.S. home lender, declined 5.9 percent to close at $30.16 in New York, the most since October. Charlotte, North Carolina-based Bank of America, the second- largest U.S. lender by assets, fell 4.5 percent to $7.02, while American Express Co. (AXP), the biggest credit-card issuer by purchases, slid 4.3 percent to $53.43.
Lenders are under pressure from a U.S. Labor Department report that payrolls expanded by 69,000 last month, less than the most-pessimistic forecast in a Bloomberg News survey, and the jobless rate rose to 8.2 percent. The data amplified investor concern that Europe’s debt crisis will be a drag on the U.S. economy, and that new banking regulations will pinch revenue.
“If we are headed into a double-dip recession, does credit quality worsen again?” said Nancy Bush, an analyst and contributing editor at SNL Financial, a bank-research firm in Charlottesville, Virginia. “Everybody has a rosy scenario about bank earnings over the next couple of years, and that could get seriously interrupted.”
Insurers also fell as 30-year bond yields plunged to record lows. Bailed-out insurer American International Group Inc. (AIG) dropped 6.8 percent to $27.21. Sun Life Financial Inc. (SLF), Canada’s third-largest insurance company, fell 5.5 percent to C$20.14 in Toronto, the biggest decline since October. Falling interest rates reduce investment income while increasing costs from obligations to clients who bought guaranteed investment products.
Every firm in the 24-company KBW Bank Index (BKX) declined, and the benchmark fell 4.9 percent, the biggest drop in almost seven months. Huntington Bancshares Inc., the Columbus, Ohio-based lender, fell 6.6 percent, the worst in the index. McLean, Virgina-based Capital One Financial Corp. (COF), the bank reliant on credit-card lending, slid 5.8 percent.
To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net
To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Rick Green at rgreen18@bloomberg.net
BofA Joins AmEx Leading Slump of Lenders
Andrew Harrer/Bloomberg
American Express Co. corporate credit cards are arranged for a photograph in Washington, D.C.
American Express Co. corporate credit cards are arranged for a photograph in Washington, D.C. Photographer: Andrew Harrer/Bloomberg
June 1 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks fell the most since November, erasing the Dow Jones Industrial Average’s 2012 advance, as American employers added the fewest workers in a year and reports signaled global manufacturing was slowing. (Source: Bloomberg)
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