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Quarter-End Insights

Our Outlook for Financial-Services Stocks

Investors should continue to pick their spots carefully in the financial-services space.

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  • Most European banks remain thinly capitalized, compounding the risks associated with the ongoing sovereign debt crisis on the continent.  
  • J.P. Morgan Chase's announcement of a large trading loss reinforced our view that large money center banks are riskier than regionals. However, these firms are also cheaper.
  • Slow improvement in the U.S. economy could be overshadowed by growing problems in Europe and China, leading to volatile markets. This should continue to benefit diversified asset managers. 

 

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Jim Sinegal has a position in the following securities mentioned above: BLK. Find out about Morningstar’s editorial policies.