Why Citigroup Inc. (C) Is Edging Downward Today

Less then three hours till the closing bell, and Citigroup Inc. (NYSE:C) is down 0.32% for the day but up 5.71% for the week. The story is similar for the rest of the Big Four banks and for the broader markets, as well. We seem to be at the start of yet another market correction. Let’s hope it’s a mild one.

Two weeks of tumult

Citigroup Inc (NYSE:C)

A week and a half ago, Federal Reserve chairman Ben Bernanke announced that quantitative easing might start being tapered back later this year if U.S. economic data continued trending positively. Investors around the world ignored the “might” and the “if” in Bernanke’s statement and instead assumed the worst, sending markets crashing last Thursday and Friday. But beginning Monday, U.S. markets came back strongly, until today.

To add gasoline to the global-markets fire, a crackdown on China’s shadow-banking sector sparked fears of a credit crunch in China. A hawkish statement by the country’s central bank didn’t help matters, and the People’s Bank of China quickly changed its tune, promising to backstop any Chinese bank experiencing a cash shortfall.

Foolish bottom line

Today’s market correction may have been the result of perceived weakness in Europe as well as an uptick in Treasury yields, the latter of which directly affects the bond markets.

You see, Ben Bernanke’s announcement didn’t just affect equity markets: Commodities markets and the bond markets were thrown into a tizzy as well. And it’s bond markets more so than stock markets that can cause existential threats to the economy. In 2008, it was defaulting mortgage-backed securities that touched off the financial crisis, which then sent stock markets crashing.

Speaking of which, it was theorized by many analysts, including yours truly, that the stock market sell-off we saw following Bernanke’s statement may have been the popping of a bubble that had formed, fueled by four years of easy Fed money. But now it looks like what was lost has been gained back, and then some in a least two cases:

1). Citigroup Inc. (NYSE:C) lost 6.27% last week, and has made back 5.71% so far this week.
2). Bank of America Corp (NYSE:BAC) lost 3.78% last week, and has returned 4.94% so far this week.
3). JPMorgan Chase & Co. (NYSE:JPM) lost 3.35% last week, and has returned 4.87% so far this week.

So if there was a bubble, it’s reformed. Or maybe there never was a bubble. But it’s hard to make sense of the generally high levels of stock market enthusiasm we’ve seen over the last six months based on economic data alone. Yes, the country is performing fine: Unemployment is down, and GDP is solid, at least compared to the rest of the world’s. But none of the numbers justify the stock market hitting high after high the way it has been.

The Foolish bottom line? The markets are just plain volatile right now. They were before Bernanke’s statement and the Chinese banking mini-crisis, and they will continue to be a for a long time to come. Citigroup Inc. (NYSE:C) is riding that wave, along with everyone else. With any luck, today’s correction will be a mild one, and investors will continue to hold onto the gains they’ve made this week. But don’t count on it.

The article Why Citigroup Is Edging Downward Today originally appeared on Fool.com and is written by John Grgurich.

Fool contributor John Grgurich owns shares of Citigroup and JPMorgan Chase. Follow John’s dispatches from the not-so-muddy trenches of high-finance and big-banking on Twitter @TMFGrgurich. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!