Morning Commentary: Preferreds weaken amid weak economic data; Bank of America mixed

By Stephanie N. Rotondo

Phoenix, Oct. 15 – Preferred stocks were melting in early midweek trading, though they had rebounded some from the day’s initial lows.

The Wells Fargo Hybrid and Preferred Securities index was off 11 basis points at mid-morning. It had been off as much as 29 bps after the open.

The broader markets were also in decline amid a drop in consumer spending, manufacturing and inflation data. The weak information has investors considering whether the U.S. economy can hold up amid a global economic slowdown.

Bank of America Corp. came out with its third-quarter results on Wednesday, showing a smaller-than-expected profit, which was brought down by massive legal fees.

Following the release, the Charlotte, N.C.-based bank’s preferreds were mixed, though the most active issue – the 6.625% series W noncumulative preferreds (NYSE: BACPW) – was softer.

The preferreds were down 13 cents at $24.98.

As bank earnings roll on, Goldman Sachs & Co. is slated to announce its earnings on Thursday. Investors are said to be expecting an improvement in profit year over year, but the investment firm’s preferreds were still heading downward.

The 5.5% series J fixed-to-floating rate noncumulative perpetual preferreds (NYSE: GSPJ) slipped 6 cents in early trades to $24.01.

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