Banks Burned by Europe — Thursday’s IP Market Recap

by Kyle Woodley | December 8, 2011 4:45 pm

Budding optimism this week for solutions to the European debt crisis ground to a halt Thursday as the head of the European Central Bank gave a pessimistic outlook for tomorrow’s Brussels meeting, killing the market’s three-day climb and sending bank shareholders to the exits.

While the ECB dropped interest rates to an all-time low 1% and said it would open up three-year loans to euro zone banks, negative comments about the low possibility of lending to the International Monetary Fund — which then would lend the money to euro zone members in a form of quantitative easing — soured the markets. The Dow Jones tumbled nearly 200 points by day’s end.

European financials like Royal Bank of Scotland (NYSE:RBS[1], -7.93%) and Deutsche Bank (NYSE:DB[2], -7.76%) were torched, as was U.S.-based Morgan Stanley (NYSE:MS[3], -8.42%), which is thought to have significant exposure to a European debt crisis. The fallout also trickled down to national banking giants Citigroup (NYSE:C[4], -6.97%), JPMorgan Chase (NYSE:JPM[5], -5.24%) and Bank of America (NYSE:BAC[6], -5.09%).

Electric vehicle maker Tesla Motors (NASDAQ:TSLA[7]) had more than enough problems without the general market sentiment Thursday, with TSLA stock plunging almost 10% to $30.89 after Morgan Stanley’s Adam Jonas hacked his price target by 37% and downgraded Tesla to underweight. Jonas expressed satisfaction with Tesla’s performance, with the pessimism instead focused toward the entire electric vehicle industry.

On the opposite side of the spectrum, Affymax (NASDAQ:AFFY[8]) — whose stock suffered through a roller-coaster ride[9] earlier this week hinging on the fate of its experimental anemia medicine, peginesatide — spiked Thursday on news that advisers to the Food and Drug Administration would back its drug.

During the day, Affymax stock almost reached $8.50, its highest point since June 2010, when AFFY shares took a 70% hit after the company’s trial anemia drug — then called Hematide — was reported to have greater cardiovascular risks than an existing Amgen (NASDAQ:AMGN[10]) product. Affymax stock finished Thursday at $7.99, up 36%.

Three Up

Three Down

As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Check out our list of previous IP Market Recaps[17].

  1. RBS:
  2. DB:
  3. MS:
  4. C:
  5. JPM:
  6. BAC:
  7. TSLA:
  8. AFFY:
  9. stock suffered through a roller-coaster ride:
  10. AMGN:
  11. DMAN:
  12. CSTR:
  13. SODA:
  14. MPEL:
  15. NOK:
  16. JNPR:
  17. IP Market Recaps:

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