Slumping financial stocks suffered another low blow this week: Their total value slipped to No. 2 within the benchmark S&P 500 Index.
King of the hill now: information technology, for the first time since tech stocks burst in 2001. Following Tuesday's close, IT accounted for 16.3 percent of the stock index's total market value, just ahead of financials, according to investment bank Keefe, Bruyette & Woods.
So far this year, the 92 S&P 500 financial stocks comprise the worst performing sector, down more than 12 percent as of Tuesday, compared to a more than 3 percent decline in the overall index. Information technology has fallen more than 5 percent for the year.
Financials, as well as the S&P 500, tumbled again on Wednesday.
The nation's mortgage meltdown has slammed bank stocks over the past year, leading to big writedowns to earnings and rising loan losses. Last week, executives at Charlotte's Bank of America Corp. and Wachovia Corp. indicated more loan losses lie ahead this year. In a report Wednesday, KBW's chief equity strategist, Fred Cannon, added to a dour industry forecast.
“We continue to expect a consumer-led recession extending through the fall of 2008, followed by a period of slow growth as the U.S. consumer balance sheet is repaired,” Cannon wrote. “In a consumer-led recession, we would not be surprised to see negative growth in consumer spending, which would ripple through the economy and the banking system.”
Bank of America shares are down 16 percent for the year, falling 2 percent Wednesday to $34.63. Wachovia shares have declined by about one-third this year.
They dropped 4 percent Wednesday to $25.66.
