First Republic stock craters after another S&P downgrade

First Republic (FRC.US) shares tanked more than 30.0% during today's session after Standard & Poor’s lowered its credit rating again, to B+ from BB+, on Sunday  saying the bank continues to face "high liquidity stress with substantial outflows". Last week, the rating agency lowered First Republic’s credit rating to junk status.  S&P added that the rating remains on CreditWatch Negative.

Also news that JPMorgan CEO Jamie Dimon is leading discussions with other CEOs of other large US banks in an effort to provide further support, including potentially converting their $30 billion in deposits into a capital injection, only slightly calmed investors' nerves. According to Wall Street Journal, preliminary discussions have been focused on ways that the banks can boost the beleaguered banks capital. Also in play is a potential investment by the banks themselves.

Also according to CNBC, JPMorgan Chase is advising  First Republic Bank on strategic alternatives,  one of which is capital raise which could dilute current shareholders. A sale of the bank is also taken into consideration.

First Republic (FRC.US) stock has been in free fall recently.  Last week alone, a troubled San Francisco-based lender lost nearly 70.0% of its market value. Sell-off accelerated in pre-market, however sellers failed to retest all-time low at $9.00 and buyers managed to erase some of the losses in the evening. Nevertheless, the main sentiment remains bearish and only a break above the local resistance zone around $42.25 could let to a bigger upward correction. Source: xStation5