European Debt Weighs on Financials

Brittney Barrett |

  The broader market rose narrowly Friday, finishing the week higher as talks of collective action for Europe's debt crisis eased anxiety over potential contagion and its impact on the global economy. Euro-zone finance ministers a working to agree on a solution and soften the current tension. U.S. Treasury Secretary, Timothy Geithner has been among the major enforcers of this, pleading with leaders to put aside divisions for the betterment of global markets.

Regarding domestic sentiments, U.S., consumer-confidence figures surpassed expectations while remaining at record low levels. While Geithner’s pleas and the better-than anticipated consumer confidence appeared enough to lead most sectors higher, financials, specifically the major banks were excluded for their direct involvement in the debt.

Losers for Friday included Morgan Stanley, which reversed a major rally from the day prior. Bank of America (BAC) was also lower on its Eurozone exposure. While ending in the red for the session, Friday’s declines were minor in comparison to those in recent weeks. The period of bargain buying and huge swings in volatility within the sector seemed to have petered out, if only for now.

JPMorgan Chase (JPM) also fell while Citigroup Inc. (C) ticked higher following speculation surrounding a plan to offer $1.7 billion in securities connected to commercial mortgages, reviving an arrangement that was retracted following Standard & Poor’s decision to abandon its ratings system because of potential problems with the model.

The deal, which is being unleashed with Goldman Sachs (GS) is expected to be marketed with investors as of next week. Details regarding the situation have been few and far between as the deal has not been officially announced. Goldman Sachs has slipped lightly for the day.

Outside the major bank portion of the sector, there were some winners. These included American Express (AXP), which likely benefitted from the consumer confidence report. Additionally, some contrarians are willing to invest in AXP on the basis of the rich-getting-richer, poor-getting-poorer idiom, helping to drive shares of the company in volatile markets. American Express is generally considered to be the card preferred by the wealthy.  Discover Financial Services (DSF), in spite of having no such reputation was also up for the day, only marginally behind the gains of AXP. Visa (V) also ticked upwards while Mastercard (MA) slumped.

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Companies

Symbol Name Price Change % Volume
ICE Intercontinental Exchange Inc. 56.65 0.30 0.53 3,148,203
C Citigroup Inc. 56.02 -1.25 -2.18 25,110,311
JPM JP Morgan Chase 81.60 -0.19 -0.23 16,931,504
AXP American Express Company 71.86 -0.67 -0.92 2,959,077
V Visa Inc. 75.72 0.29 0.38 13,629,619
GS The Goldman Sachs Group Inc. 223.36 -3.27 -1.44 5,297,420
BAC Bank of America Corporation 21.23 -0.27 -1.26 128,468,708

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