In a fine start to the week, S&P 500 financial stocks lost $150 billion of value in one day. That makes more than $1.3 trillion since last October and more than $1 trillion so far this year. And counting…
AP: The drop in names like Lehman Brothers (LEH), Morgan Stanley (MS) and Merrill Lynch (MER) caused the financial section of the Standard & Poor’s 500 index to lose almost $150 billion in value on Monday, according to the rating agency. That means S&P 500’s 85 financial components have lost some $1.3 trillion since the sector reached a high last October.
Even more startling is that shares of 35 of the companies, which include insurers, have lost more than half their value so far this year. The financial sector used to be the index’s main driver, and many economists believe that the broader market will rise or fall on their health.
“Some would argue that perhaps the sell-off in financials is overdone, but at the same time there is just much uncertainty out there about write-offs, loan losses, and how bad the housing market is,” said Jim Herrick, a director of equity trading at Baird & Co. “For a period of time the pain was in the big money centre banks, but now it’s spreading.”