Good Stress Test Grades Don’t Impress Bank Investors
Emphasis on capital doesn’t protect the bottom line.
That “A” in gym doesn’t make up for the “D” in math.
Photographer: Steven Gottlieb/Corbis/Getty Images
Bank investors seem more stressed out than they have been in a while. Shares of the big banks are down an average of 9.3 percent this year, compared with a gain of nearly 1 percent for the S&P 500 Index.
The results last week of the first half of the Federal Reserve’s stress tests, in which every bank passed, haven’t lifted the mood at all. As of Wednesday evening, the S&P 500 Financials Index had fallen 13 consecutive days — the last four since the results came out. The results of the second half of the test, which dictates how much banks can pay out in dividends and spend on buybacks, comes out Thursday afternoon. But don’t expect this round, even if the banks do similarly well, to be any more calming.