On Monday, the Dow (NYSE:DIA) dropped 245 points with big banks Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM) leading the way. Several financial giants were involved in the selloff as banks started to report earnings. Despite poor earnings across the financial sector (NYSE:XLF), four banks bucked the downward trend.
After accounting tricks boosted earnings of JP Morgan and Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), the largest US home lender, announced a 6% decline in revenue, and narrowing margins. “Given this low-rate environment, I think investors are very focused on direction of bnak margins, and Wells was a little bit weaker than expected on the net interest margin,” David George, bank analyst said.
Investing Insights: Will Weak Bank Earnings Force Investors into Gold?
However, investors rushed to these 4 banks (NYSE:KBE) despite the selloff:
Shares of State Street (NYSE:STT) edged higher after a letter from The Trian Fund Management hedge fund, led by billionaire investor Nelson Peltz, sent a letter to State Street’s management saying that shares are well below where they should be. The hedge fund said the trust bank could have an implied stock price target of about $99 per share by 2014. However, investors should do their due diligence as the bank, along with rival Bank of NY Mellon (NYSE:BK), faces lawsuits concerning foreign exchange transactions. State Street is one of the world’s largest custodian banks. The custody bank services institutional investors and manages financial assets worldwide. Clients include the well-known bond company, Pimco.
Northern Trust Coporation (NASDAQ:NTRS) closed .57% higher as investors await the bank’s earnings release on Wednesday. On average, analysts predict $961 million in revenue this quarter, which represents an increase of 7% from last year. Northern Trust Corporation is a financial holding company that provides investment management, asset and fund administration, fiduciary, and banking solutions for corporations, institutions, and affluent individuals.
Breaking from the custody bank theme, shares of Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) both closed higher on Monday. Investors may be hoping for a strong earnings release from Goldman on Tuesday, considering the company rarely misses estimates. Morgan Stanley announces earnings on Wednesday.
Don’t Miss: The Dow’s Fantastic 6 Stocks.