The big banks appear poised to end a week of very mixed and mostly inscrutable earnings reports well in the black, and they have started Friday with a bang. The market continues to focus on news out of Europe, and investors are now more hopeful that leaders can come to an agreement to expand the Euro Zone bailout fund. The Fed is also working on a possible plan to buy more mortgage securities, the Wall Street Journal reported.
The slew of earnings reports, indeed, may have been a sideshow, given banks’ exposure to macro risks and unknown litigation expenses. Because of that, financial stocks are mostly moving on news out of Europe, and any sign that the U.S. economy is improving. As of this morning, shares of Bank of America (BAC) and Citigroup (C) were up about 7% for the week, and Morgan Stanley (MS) was 12% higher.
Wells Fargo (WFC) is the big exception, as its shares are down 1.3% for the week. The bank missed earnings expectations on Monday and reported that its delinquencies and new non-performing assets had risen in the third quarter, in contrast to improvements on most credit metrics for its competitors.
Perhaps, investors are listening to the advice from Barron’s this weekend to “Buy the Banks” as many trade at tremendous discounts to their book values.
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