business

By Greg Morcroft

The KBW Bank exchange-traded fund (KBE:KBW Bank ETF
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Last: 9.54-1.23-11.42%

4:00pm 03/05/2009

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KBE 9.54, -1.23, -11.4%) , which tracks the largest U.S. banks, fell 11%, and the Financial Select Sector SPDR (XLF:Select Sector SPDR: Financial Select Sector SPDR Fund
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Last: 6.24-0.65-9.43%

6:40pm 03/05/2009

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XLF 6.24, -0.65, -9.4%) , which tracks all the financial stocks in the S&P 500, shed 9%.
For some perspective, the financial stocks in the S&P 500 (SPX:S&P 500 Index
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Last: 682.55-30.32-4.25%

5:00pm 03/05/2009

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SPX 682.55, -30.32, -4.2%) had more of the riskiest types of assets on their balance sheets at the end of 2008 than they did at the end of that year's first quarter, according to research from market strategist Ed Yardeni and his team.
Yardeni's latest research shows that there were $537.4 billion of Level 3 assets at the firms at the end of 2008. "That's actually up to 10.3% of total assets from 8.0% at the end of the first quarter" of 2008, Yardeni said.
"Even uglier is that 80.6%, or $7.4 trillion, of the assets held by the S&P financials companies were Level 2," he said in a research report. Level 2 assets are so-called mark-to-model, which are carried at a value based on assumptions, not true market prices.
Stock action
Shares of Citigroup (C:Citigroup Inc
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Last: 1.02-0.11-9.73%

6:40pm 03/05/2009

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C 1.02, -0.11, -9.7%) fell 10% Thursday and closed at $1.02, after trading as low as 97 cents, the lowest Citi has traded ever. The drop sent chills through investors, before recovering to $1.02. Despite the dismal stock market, the $1 mark is still a psychological threshold.
Citi's stock is unlikely to find firm footing for at least a month, when it completes the conversion of what it hopes will be $27.5 billion of preferred stock and trust preferred securities into common stock. Until then, arbitrage players will seek to exploit the difference between the premium Citi is paying for the conversion and the current stock price, executives and analysts say.
Citi does not face any immediate risk of delisting because of a temporary suspension of New York Stock Exchange rules. However, any real recovery in the stock will require investors to anticipate an economic turnaround - a hope that keeps getting pushed farther into the future. See full story
And Wells Fargo and J.P. Morgan (JPM:JPMorgan Chase & Co
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Last: 16.60-2.70-13.99%

4:01pm 03/05/2009

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JPM 16.60, -2.70, -14.0%) fell 16% and 14%, respectively. Long viewed as two of the best-positioned firms in the global financial collapse, the banks saw their stocks fall after Moody's expressed renewed concern about their near-term future.
Moody's on Wednesday said it is reviewing Wells Fargo & Co.'s (WFC:Wells Fargo & Company
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Last: 8.12-1.54-15.94%

6:40pm 03/05/2009

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WFC 8.12, -1.54, -15.9%) long-term ratings and may downgrade them, depending on its analysis of the impact that future credit costs could have on Wells' capital ratios.
"The review was prompted by a concern that Wells Fargo's capital ratios could deteriorate in 2009 from their current levels, which are comparatively low, because of the potential need to take high loan loss provisions in 2009," Moody's said in a statement.
Moody's cut J.P. Morgan's rating outlook to negative from stable. The change reflects the rating agency's expectations that J.P. Morgan's results will continue to be saddled by sustained high provisions and credit costs for the next several quarters, and, as a result, J.P. Morgan's capital generation is likely to be modest, Moody's said.
Shares of asset manager Legg Mason Inc. (LM:Legg Mason, Inc
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Last: 12.29-0.08-0.65%

6:40pm 03/05/2009

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LM 12.29, -0.08, -0.6%) closed off about 1%.
The shares had risen most of the day after the firm said it had sold most of its holdings of debt from structured investment vehicles and other similar conduits.
Costs incurred by the holdings, once worth billions of dollars, had contributed to Legg Mason's poor recent performance, which included a $1.5 billion net loss in the fourth quarter of 2008.

source : MarketWatch

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