Preferred market rises amid bank earnings; investors ponder PNC; Fannie, Freddie retreat

By Stephanie N. Rotondo

Phoenix, Oct. 14 – As global economic indicators continued to worry investors, preferred stocks were moving higher Tuesday, spurred by the kick-off of bank earnings.

“JPMorgan, Citigroup and Wells Fargo all reported earnings that were decent,” a trader said, noting that JPMorgan “missed [expectations] a little.”

Most of the banks’ preferreds were on the rise in early trading.

Freddie Mac and Fannie Mae paper were also “bouncing” yet again in early trading, continuing a trend from Friday when Fairhome Funds said it was appealing a federal judge’s ruling that dismissed lawsuits alleging the government’s takeover of profits was illegal.

But the preferreds lost those early gains, ultimately ending the day softer. The agencies’ common stock, however, finished higher.

The primary space meantime remained quiet, even with the firmer tone and the “decent” bank earnings.

The Wells Fargo Hybrid and Preferred Securities index closed up 23 basis points.

With more banks slated to bring out earnings this week, investors are keeping an eye on PNC Financial Services Group Inc.

The Pittsburgh-based company has posted quarterly results that have beat expectations for the last year. Investors are now wondering if the bank can keep up that trend.

Meanwhile, Fannie and Freddie preferreds rose in early trading but gave back those gains by the end of business.

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