What's Behind Today's Bank Stock Pullback
Financials are the weakest link driving the market pullback on Thursday.
Citigroup , Morgan Stanley , and JPMorgan are all down by nearly 2 percent.
Sector analysts say its a natural hangover from yesterday's surprise rally.
"I was expecting it to be down today when I came to work. Yesterday, they were up 8 to 9 percent because of the coordinated central bank activity," says UBS equity analyst Dean Ungar. "Today, the economic data was kind of negative."
Weekly jobless claims jumped back above 400,000, according to the U.S. Department of Labor. This news came on the heels of the Federal Reservesurvey, showing slower-than-expected gross domestic productgrowth of 2 percent.
With the Dow Jones Industrial Average and the S&P 500 in negative territory, stocks are clearly unable to extend yesterday's market rally.
On the other hand, Brian Kelly of Shelter Harbor Capital, believes this week was ultimately very good news for Wall Street banks.
"Yesterday, the Federal Reserve extended swap lines to the ECB [European Central Bank], and took the credit risk off," Kelly said on CNBC's Halftime Report. "That means Europe will not implode."
Longer-term, analysts see European credit relief as an upside to an already-improving sector.
"These banks have more capital than they've ever had, lots of liquidity, and their asset quality is improving quarter by quarter," adds UBS's Ungar.
______________________________
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where's the US Dollar Today?
- Track Treasury Prices Here
______________________________
Disclosures:
Neither Brian Kelly nor analyst Dean Ungar personally own shares of companies mentioned.
