State Street forecast leaves some unconvinced

Shares of State Street Corp., the Boston-based custody bank, briefly soared 9% today after its chief executive confirmed an upbeat fourth-quarter earnings report. They subsequently settled back near their opening levels as investors questioned the estimate. State Street chief executive Ronald Logue today said that operating income growth this year should be at the upper end of a 10% to 15% range previously forecast and for the first time said that 2009 growth results will be closer to 10%. He spoke in New York at the Banking and Financial Services Investor Conference, sponsored by Merrill Lynch & Co. Inc. of New York. Investors, who have been bracing for continued bad news from banks, as the economy heads into what many CEOs see as a prolonged recession, hiked State Street shares by $3.70, or 8.97%, to $44.93, as Mr. Logue made his remarks midmorning. However, shares steadily drifted downward as some investors noted that he did not give convincing arguments for his upbeat outlook. At midafternoon, shares were trading up 82 cents, or 2%, at $42.05. They are down more than 48% year-to-date.