Wall Street opens higher open after jobs data
The only stress some bank-stock investors felt Friday was from being unable to buy in fast enough.
Financial issues rocketed, leading the overall stock market higher, as major banks met with early success in their efforts to raise capital after the less-onerous-than-feared results of the government’s so-called stress tests.
Wells Fargo and Morgan Stanley raised a collective $15.5 billion Friday morning in stock and debt sales amid robust investor demand. Regional banks such as Ohio’s Fifth Third Bancorp soared on analyst upgrades and expectations they would also be able to raise the mandated capital.
Wall Street clearly was thrilled that the financial industry found private investors eager to provide new financing, a crucial first step toward eventually weaning the banks from government assistance.
“The biggest sense of relief is that there are sources of private capital and ready sources of private capital,” said Nancy Bush, an analyst at NAB Research in Annandale, N.J.
Just as important, some professional investors increasingly are worrying about being left behind as the financial-sector rally keeps going.
The BKX bank stock index surged 12% on Friday, bringing its advance since March 6 to 135%. Fifth Third zoomed 59% and Huntington Bancshares soared 34%. Wells Fargo rose 14% and JPMorgan Chase added 11%.
“Everybody feels, ‘I just missed a four-bagger on Bank of America -- I have to get in,’ ” said Joshua S. Siegel, managing principal at StoneCastle Partners, a New York asset-management firm specializing in bank stocks.
The Dow Jones industrials surged 164.80 points, or 2%, to 8,574.65. The Standard & Poor’s 500 index jumped 2.4%. For the week, the Dow gained 4.4%, trimming its losses for 2009 to only 200 points, or 2.3%. The S&P; 500 index jumped 5.9% on the week.
As for the bank stocks, a number of market watchers, including Bush and Siegel, fear that investors are getting ahead of themselves, given that the banking sector still faces daunting obstacles, including mounting woes in commercial real estate woes and credit cards.
“It’s gone from a meltdown to a melt-up,” Bush said. “We don’t know when normalized earnings are going to get here. Probably not until 2011 or 2012. Wall Street is doing what Wall Street does, which is justify a move after the fact.”
For long-term investors, “I think you’d be crazy to get into the banks at these levels,” said Dave Rovelli, head of trading at brokerage Canaccord Adams in Boston.
Jim Glickenhaus, portfolio manager at Glickenhaus & Co. in New York, agreed at least in part: “We are ahead of ourselves and we’ve been ahead of ourselves for a couple of weeks.”
“Having said that,” he added, “you can never tell what the public’s going to do. It can keep going up from here.”
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tom.petruno@latimes.com
