The Goldman Sachs booth on the floor of the New York Stock ExchangeChris Hondros
It's not shaping up to be a good week for U.S. bank stocks.
Ever since Citigroup Inc. completed its one-for-10 reverse share split, lifting its shares in an artificial way to $45 (U.S.) and making them more appealing to institutional investors (in theory, anyway), the share price has been sliding. On Thursday afternoon, the price hit its lowest level since the end of November.
Meanwhile, Goldman Sachs Group Inc. is also selling off after influential analyst Dick Bove of Rochdale Securities put a "sell" recommendation on the stock. He argued that the pressure on the U.S. Justice Department to bring a criminal lawsuit against the firm is "building to a high pitch." The shares suffered their worst one-day decline in about a year.
And now this, a downbeat report from Moody's Investors Service, arguing that the outlook for the U.S. banking system remains negative.
"Despite some improvements in asset quality trends and capital levels, the tepid economic recovery coupled with limited job growth undermine the likelihood of a return to normalcy by putting pressure on home prices, consumption, and investment," said Sean Jones, senior vice president at Moody's and co-author of the report. "At the same time, regulatory reform and increased competition are negatively affecting bank earnings."
David Berman