NEW YORK - The financial sector took a beating in the first quarter, but financial "bottom feeders" will speed its recovery, possibly ahead of the rest of the market, experts said here at a gathering of researchers and data providers.
"The financial sector was down 60% for the first quarter," said Mike Thompson, managing director of Thomson Research, a division of Thomson Financial. "The numbers are pretty bad, but believe it or not, financials are going to recover before the rest of the market does." Financial "bottom feeders" will likely continue to make large cash infusions into the financial sector, as bargain prices will be too good to resist, Thompson said.
If you subtract financials, the Standard & Poor's 500 index was up 7% for the quarter instead of down 13%, he noted.
"The problem is that the financial sector has gotten very big, accounting for 24% of all profits for the S&P," Thompson said. The key to the recovery of the U.S. economy is the U.S. consumer, he stressed.
"Without the consumer, the economy gets real small, real fast," he said.
While some analysts are predicting growth in the fourth quarter of the year to be above 60%, many others are doubtful of this market optimism. While the U.S. was enjoying 14 consecutive quarters of double-digit growth, people were saying it can't last. They were right, Thompson said.
"I've never seen markets like this before in my life," Thompson said.
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