Friday, June 22, 2012

Stocks edge back up after downgrade news

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Stocks coming back. Moody's decision yesterday evening to downgrade 15 global banks grabbed a lot of attention, and investors anticipating the news sent the Dow to its second-biggest loss of the year. But banks like Morgan Stanley weren't hit as hard as expected, and stock futures were up Friday morning, the Wall Street Journal says. Bank of America was up more than 1.5 percent in pre-market trading.

Spain banks. Seeking to ease concerns that Spain's banks would need more than the 100 billion euro bailout pledged to them, a consulting team hired by the Spanish government put out a report saying that the banks only needed about 62 billion euros in capital, Bloomberg reports. Bank stocks gained and the country's economy minister said there is now a "road map" to a solution.

Twist too hard? The Fed's decision to continue Operation Twist, in which it sells short-term Treasuries and buys long-term ones, could have the negative effect of eliminating liquidity in the short-term market, traders fear, the Financial Times reports. It could put a crimp in the so-called "repo" market, where traders use Treasuries as collateral or short-sell them.