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Financial Stocks Roundup: Bank Stocks Decline on Downgrade Fears


Markets are preparing for downgrades on 100 banks.

MINYANVILLE ORIGINAL Financial stocks are declining again as Spain's borrowing costs spiral out of control and anti-austerity parties are struggling to form a government in Greece.

Spain will be making capital injections to Bankia, a tottering Spanish lender that is facing mounting losses from non-performing loans.

Bank of America (BAC) shares are down 0.36% today as the bank holds its annual shareholders' meeting in Charlotte, North Carolina. The bank is facing questions from investors inside and protesters outside over foreclosures and subprime lending practices.

Moody's will start downgrading credit ratings on 100 banks and investors are pricing in the downgrades. Morgan Stanley (MS), UBS AG (UBS), and Credit Suisse (CS) could be cut by as much as three notches. Morgan Stanley reported that it may have to add $7 billion in new collateral if it is cut by three notches. JPMorgan Chase (JPM), Goldman Sachs (GS), and HSBC (HBC) might be cut by two notches. BNP Paribas (BNPQY.PK) and Deutsche Bank (DB) might also face credit downgrades.

The financial sector is lagging behind the S&P 500 (SPY) and Dow (^DJI) today. The Financial Select Sector SPDR ETF (XLF) slipped 0.93% today. The KBW Bank Index (^BKX) is off 1.44%.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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