Quick Read
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Citigroup drops 4% and Bank of America falls 3%, with trader positioning rather than company-specific news driving Citigroup’s steeper decline.
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XLF falls roughly 1% while SPY slips just 0.3%, confirming selling pressure is concentrated in large bank stocks, not the broad market.
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Merrill Lynch agreed to pay $39 million to settle claims it swept idle retirement cash into accounts paying near-zero interest.
Selling across financial stocks is landing hardest on some of the biggest U.S. banks, and Citigroup (NYSE:C) shares are leading the money-center names lower as traders pull back from the group. Citigroup stock is down 4% to $123.81, posting the largest decline among the large banks.
Meanwhile, Bank of America (NYSE:BAC) stock is down 3% to $53.07, a smaller drop than Citigroup stock is posting despite a fresh legal headline from the Merrill Lynch unit. JPMorgan Chase (NYSE:JPM) stock is down 0.9% to $327.81, the smallest pullback of the three and a sign that sellers are drawing clear lines between the biggest banks.
Meanwhile, the Financial Select Sector SPDR ETF (NYSEARCA:XLF) is down 0.99% to $52.87, a smaller decline than Citigroup and Bank of America shares are showing. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.3% to $760.54, so equities overall are seeing only a modest pullback.
Merrill Lynch Settlement Lands at Bank of America
Bank of America’s Merrill Lynch unit will pay $39 million to settle a class action over cash sweep accounts, Reuters reported. Settlement papers were filed late Wednesday in Manhattan federal court, and the case centered on idle retirement cash that customers stated Merrill Lynch swept into deposit accounts paying very little interest. Approval from U.S. District Judge Valerie Caproni is still required, and the agreement avoids a trial that had been set for mid-October.
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For Bank of America, the payment is a small sum next to the scale of the bank’s operations, and the agreement removes trial risk from the company’s legal calendar. Because the class action was already public, the deal adds no surprise expense. That makes the settlement a thin explanation for the 3% slide in Bank of America stock, and the Merrill Lynch news says nothing about the largest drop in Citigroup stock.
