Midday Commentary: Trading lackluster in half-day session; foreign banks falter post-downgrade

By Stephanie N. Rotondo

Phoenix, July 3 - Wednesday's half-day session was "pretty quiet" in the preferred stock arena, a trader reported.

He said there was a "little pressure" early in the day, though most things had come back to steady.

"People are nervous about what's going on in Europe and Egypt," he said. That could result in a "rush to Treasuries," which would in turn cause a sell-off in the preferred space.

However, he also speculated that the market could head for higher ground if investors are looking for yield.

Also keeping the market relatively in check were new jobs numbers that were "in line" with expectations.

Foreign banks Barclays plc, Deutsche Bank plc and Credit Suisse were all downgraded by Standard & Poor's on Wednesday, as the agency worried about the size of the firms' investment banking portfolios and the impact of new regulations.

All of the banks were cut to A from A+.

On the news, Deutsche Bank preferreds were among the most actively traded issues as the securities slipped.

The 7.6% trust preferreds (NYSE: DTK) were off 8 cents at midday at $26.26. The 8.05% trust preferreds (NYSE: DKT) were down 23 cents at $26.82.

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