With all the talk of financial sector bailouts, there is one group that is in desperate need of a bailout -- the shareholders. Their wallets were in dire need of help on Monday as financials stocks tumbled following news of a pair of bank casualties. First National Bank of Nevada and First Heritage Bank NA were seized by the FDIC and sold to Mutual of Omaha Bank. The bank news as well as lowered expectations for 2008 and 2009 gross domestic product helped to drive down the Dow Jones Industrial Average 232.94 points on Monday to close at 11,131.08.
Continue reading below
Merrill Lynch & Co. was one of the hardest hit among the financials, sliding 11.59% to $24.33 per share. Merrill has been hit especially hard by credit market write-downs, posting a $4.9 billion second-quarter loss earlier this month, which had propelled it to divest its 20% stake Bloomberg LP Thursday. Merrill did not want to be alone in its downward spiral and so it generously helped to drag its equally battered peer Lehman Brothers Inc. down as a Merrill analyst projected that Lehman may write down an additional $2.5 billion in the third quarter. Lehman shares slid 10.44% to close at $15.27.
The bank closure news was very close to home for other regional banks. National City Corp. dropped 5.10% to close at $4.84 per share, Fifth Third Bancorp fell 5.69% to $12.94, and KeyCorp declined 4.93% to close at $10.61. The trio of trouble Ohio-based banks are reportedly placing their asset management divisions on the block, according to a July 23 Wall Street Journal report.
Want to find a bull in this world of bears? Look for strategic deals outside of the financial realm. EnergySouth Inc. was a bright spot on the Street, soaring 18.82% to close at $59.60 on news that Sempra Energy said it would pay $61.50 per share, or $510 million, to buy EnergySouth Inc., expanding its presence in natural gas storage and distribution to the Southeast. - Michael Rudnick
Comments
I thought agree with some points but we have to also keep in account that Banks not all of a sudden became good or bad. I think a little bit of analysis will lead you to lots of blame on analysts. Same analyst who were saying to buy Bank of America, Citi bank are now coming everyday with with new news and the stocks are getting slammed.Citi bank at $40 was considered to be safe and so was BOA.
Part of the problem is lack of knowledges of analysts.Is like 20 some year kid teaching how to run a business.
We have to remember, Real Estate and Financial s are back bone of our economy. Lending and credit is what makes us grow.
I do agree with your point there is lot of potential in energy stocks. I will prefer wind, solar. We have to make our energy independent.