Bank of America Corp. and Citigroup Inc. posted two of the three biggest declines in the Standard & Poor’s 500 Index after results fell short of those at rivals as managers had to focus on cutting costs.
Bank of America Corp. , facing an estimated $18 billion bill to resolve mortgage and foreclosure disputes, may cover the cost by liquidating its stake in China Construction Bank Corp., according to Citigroup Inc.
Bank of America Corp. and Wall Street firms that notched perfect trading records in the first quarter are now depending on an accounting benefit last used in the depths of the credit crisis to prop up their results.
Bank investors may have to wait at least another quarter for trading to rebound as analysts expect lower trading revenue in the current period, the fifth straight year-over-year drop, amid weaker volume and market declines.
Morgan Stanley fell in New York trading after reporting a 50 percent drop in earnings on the biggest decline in trading revenue among Wall Street firms. The company said it will cut headcount by 4,000 this year.
Potential downgrades of banks including Morgan Stanley and UBS AG, which could have their credit ratings cut by Moody’s Investors Service to the lowest level ever, threaten to shake up Wall Street’s balance of power.
Bank of America Corp., the worst performer in the Dow Jones Industrial Average last year, had profit estimates cut by analysts at Citigroup Inc. and KBW Inc. this week on higher projected losses for soured mortgages.