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Financial stocks drop as economic worries deepen

Financial stocks drop as economic worries deepen
Greek debt crisis, economic worries weigh on financial stocks

BOSTON (AP) — Financial stocks ranging from the biggest U.S. banks to credit ratings agency Moody’s Corp. dropped more sharply than the broader market on Wednesday, hammered by growing investor unease about Greece’s debt crisis and another report suggesting the U.S. economic recovery is slowing.

The Standard & Poor’s Financial Sector Index fell 2.3 percent in afternoon trading. The S&P 500 declined 1.8 percent.

Stocks fell as Greece appeared to be making little progress in approving austerity measures aimed at preventing a government default. Riots against the new cutbacks tore through central Athens on Wednesday, while Greece’s beleaguered government was in power-sharing talks that could lead to the resignation of Prime Minister George Papandreou.

His government has faced internal party revolt over a new austerity package essential to continue receiving funding from an international bailout. A default could undermine the future of the eurozone, trigger a chain reaction that would leave the continent’s banks vulnerable, and potentially slow economic growth in Europe and elsewhere.

Meanwhile, a report on manufacturing in the New York area also came in far below forecasts, adding to a recent spate of negative economic reports that have prompted many economists to scale back U.S. growth projections. Wednesday’s manufacturing report raised the possibility that factory production nationwide may be weaker than many had believed.

Wednesday’s developments led investors to seek safer assets, driving the dollar up against the euro and sending U.S. government bond prices higher. The yield on the 10-year Treasury note, which moves opposite its price, fell below 3 percent.

Such low yields have made it difficult for banks and other financial services companies to generate returns from assets they hold.

Among the hardest-hit financial stocks was Moody’s, whose shares fell $1.37, or 3.3 percent, in afternoon trading to $40.25. Others included State Street Corp., which fell $1.25, or 2.8 percent, to $42.87, and asset manager BlackRock Inc., down $5.41, or 2.8 percent, to $187.15.

A look at stocks of major banks:

— JPMorgan Chase & Co. dropped 93 cents, or 2.2 percent, to $40.68.

— Bank of America Corp. fell 23 cents, or 2.1 percent, to $10.57.

— Citigroup Inc. declined 71 cents, or 1.8 percent, to $38.07.

— Morgan Stanley fell 41 cents, or 1.8 percent, to $22.39.

— Wells Fargo & Co. lost 44 cents, or 1.6 percent, to $26.58.

— Goldman Sachs Group fell $1.86, or 1.4 percent, to $135.24.

Adapted from Yahoo Finance

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