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Wells Fargo's stock swings to a loss from a gain after net interest income guidance lowered

Tomi Kilgore

Shares of Wells Fargo & Co. took dive in morning trade, swinging to a loss from a gain, after the bank provided a downbeat full-year outlook for net interest, citing the negative impact of the current low interest rate environment and tighter loan spreads from competition. The stock dropped 1.8% toward a 3-month low, after being up as much as 2.2% at the intraday high. Chief Financial Officer John Shrewsberry said on the post earnings conference call that net interest income is now expected to decline 2% to 5% in 2019, compared with previous guidance of a 2% decline to a 2% rise. The current FactSet consensus of $51.15 billion implies a 1.0% increase. "Several factors have driven a shift in our view including a lower absolute rate outlook, a flatter curve, tightening loan spreads resulting from a competitive market with ample liquidity and continued upward pressure on deposit pricing," Shrewsberry said, according to a transcript provided by FactSet. The stock has now gained 1.8% year to date, while the SPDR Financial Select Sector ETF has rallied 13.5% and the S&P 500 has climbed 15.8%.