Goldman Sachs Slides after Downgrade; Financials Falling

[Stocks-to-Watch]

Despite a relatively rosy December jobs report, stocks are down today, and the financial sector is among the worst performers.

Goldman Sachs (GS) is losing ground after Wells Fargo analyst Matthew Burnell downgraded the bank to Market Perform on concerns about weak trading and banking results and general macro headwinds. Goldman isn’t the only bank that will feel pressure; Burnell reduced his* fourth quarter EPS estimates on Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM) and Morgan Stanley (MS) by about 31% overall.

“While we note GS shares outperformed most [peers] in 2011 (with the exception of Outperform-rated JPM), we view GS as vulnerable to a continued deterioration in the global economic growth outlook and capital market dislocations, which may adversely impact the firm’s revenue generation and return profile.”

“We are once again reducing our Q4 estimates (by an average of 31%) to reflect seasonally soft December investment banking and trading volumes, and we are reducing our 2012-13 EPS estimates by an average of 11% to reflect a more cautious outlook for investment banking and trading activity amid a slowing global economy and elevated political and regulatory risks.”



Original Article Source by Barrons.com