Morgan Stanley (MS) traded dramatically higher last Thursday after the European bailout was announced. But that momentum has reversed today, with the bank down 6.3% in midday trading.
Clearly, investors are now questioning whether the European bailout will stop a domino effect of debt failure from tumbling across the continent — Italian bond yields continue to surge, with the country’s 10-year bond climbing to 6.1% today, and the credit default swap market is pricing more risk into the sovereign debt of Spain, Belgium and others.
Morgan Stanley has downplayed its exposure to European banks and sovereign debt, but investors are still not showing confidence in the bank. Bank of America (BAC) is also sliding in midday trading, withthe stock down 4.6% and is close to dipping below $7 . Citigroup (C) is down 5.6%.
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