Preferreds soften amid weak economic data; Bank of America sees profit, preferreds decline

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 finished off 9 basis points. That was up considerably from the lows, which were hit shortly before 10 a.m. ET and then then again shortly before 2 p.m. ET.

While the index didn’t end at the day’s high, it was near it.

The broader markets were also volatile – mostly toward the downside – 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.

“It was an ugly day,” one trader said. “The [Treasury] bond market was taking it on the chin.”

At one point, he said, the long-bond had rallied 6 points, only to give up some of those gains.

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

Following the release, the Charlotte, N.C.-based bank’s preferreds traded mostly lower.

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.

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