Can Big U.S. Banks Escape Europe’s Malaise?… Meredith Whitney Chimes In (DB, STD, NBG, BAC, JPM, C, WFC)

The financial sector was the best performing index out of the S&P 500 during the first quarter.  That was when investors were decoupling from the woes of Europe.  With European bank shares falling now that European nations are back front and center, the obvious fear is that the big US banks are going to get pulled down much further as their brethren get pummeled overseas.

Deutsche Bank AG (NYSE: DB) is down 3.7% today at $40.70.  Banco Santander, S.A. (NYSE: STD) hit a new 52-week low this week and shares are down $0.01 at $6.02 today for its ADR in New York trading.  National Bank of Greece SA (NYSE: NBG) is up only $0.01 at $2.18 for its ADR in New York.

Meredith Whitney told Bloomberg today that first quarter bank results were boosted from one-time issues and that after a very dismal April it will be challenging in the second and third quarters of this year.  It is no wonder that investors are still betting against banks here in the United States when you see Europe in a mess and when you keep getting come-along analyst calls driving things down.

Bank of America Corporation has broken down back under $8.00 today to $7.93 after a 2.8% drop. That marks only the second time being under $8.00 for a lowest print on the day going back to early March and it is down from peak of just over $10.00 back on March 26.  Citigroup, Inc. (NYSE: C) is down less than 1% today at $32.41 in late-day trading and that is down from almost $36.00 as recently as April 18.

J.P. Morgan Chase & Co. (NYSE: JPM) is down 0.7% at $42.91 in late Thursday trading and this was a $46.00 stock at the start of April.  This one has held up better considering that it is one of the two healthiest U.S. banks in America.  Wells Fargo & Co. (NYSE: WFC) is down 0.5% at $33.40 and still at a premium to its book value and down only $1.20 from its 52-week high of $34.59.

The long and short of the matter is that investors are still abandoning Bank of America even though the bank showed only a small exposure in total to the PIIGS in Europe.  The fear is either surrounding more mortgage woes or more European bank woes… or both.

JON C. OGG