Bank stocks mixed post Fed's stress tests

Sector Snap: Stress test stresses Citi and MetLife, while BofA climbs

Associated Press

NEW YORK (AP) -- Shares of major banks were trading up and down Wednesday after the Federal Reserve said most institutions are strong enough to survive another severe downturn.

Even some banks that passed the Fed's stress tests dropped. Financial stocks had rallied in late trading Tuesday in anticipation of the Fed's announcement results after markets closed Tuesday.

The Fed said that 15 out of 19 big U.S. banks had enough capital on hand to withstand an economic crisis, and approved their plans for dividend increases and stock buybacks.

But Citigroup Inc. shares slid more than 3 percent Wednesday afternoon, shedding $1.24 to $35.21, on news that it had failed its test. The Fed said that Citi does not have enough capital to raise its dividend and still withstand a financial crisis far worse than 2008. Raising dividends and buying back stock returns more cash to shareholders and can make an individual share more valuable.

J.P. Morgan analyst Vivek Juneja downgraded Citigroup's stock Wednesday, saying that having failed the stress test "hurts management credibility."

Some bank stocks may be dropping despite passing the Fed's test because investors want to lock in recent gains. Since October, the KBW Bank index is up 41 percent, said Morgan Keegan analyst Robert Patten. He added that analysts expect tepid profits in the financial sector early this year, which could weigh on shares in the near term.

Afternoon trading in other financial companies tested by the Fed:

— American Express Co. added $1.45, or 2.7 percent, to $55.70.

— Bank of America Corp. rose 25 cents, or 3 percent, to $8.74.

— Bank of New York Mellon Corp. lost 15 cents to $23.13.

— BB&T Corp. added a penny to $30.41.

— Discover Financial Services slipped 10 cents to $31.92.

— Fifth Third Bancorp rose 5 cents to $14.21.

— Goldman Sachs Group Inc. fell 3.2 percent, or $4.03, to $120.51.

— JPMorgan Chase & Co. dipped 12 cents to $43.27.

— KeyCorp gained 21 cents, or 2.5 percent, to $8.47.

— MetLife Inc. slid $2.19, or 5.6 percent, to $37.27. The insurer failed the stress test.

— Morgan Stanley dropped 30 cents, or 1.6 percent, to $18.63.

— Regions Financial Corp. jumped 38 cents, or 6.5 percent, to $6.15.

— PNC Financial Services Group shed 79 cents, or 1.3 percent, to $61.15.

— State Street Corp. gained 92 cents, or 2.1 percent, to $44.79.

— SunTrust Banks Inc. added 84 cents, or 3.7 percent, to $23.42. The bank failed the stress test.

— U.S. Bancorp gained 13 cents to $31.14.

— Wells Fargo & Co. fell 17 cents to $33.16.

The KBW Bank index rose nearly 1 percent.

Ally Financial, which also failed the stress test, is not a publicly traded company.

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