July 22, 2017

Wall Street Tumbles on Central Bank Fears

Stocks were lower on Tuesday after the Bank of Japan failed to take stimulus measures, a move that increased investors’ worries about the eventual decline in central bank support that has bolstered an equities rally.

The Standard Poor’s 500-stock index fell 0.8 percent in afternoon trading, the Dow Jones industrial average lost 0.7 percent and the Nasdaq composite was 0.9 percent lower.

The Bank of Japan kept monetary policy steady at the end of its two-day meeting, holding off on taking fresh steps to calm bond market volatility. Unhappy traders sent the Nikkei down 1.5 percent.

The lack of additional action rattled investors, underscoring worries about what would happen when the stimulus programs eventually go away. At the same time, nervousness remains over when the Federal Reserve may slow its measures, which have been a significant driver of this year’s stock market rally.

“This market has been fed by extremely supportive government policies around the world,” said Richard Meckler, president of the investment firm LibertyView Capital Management in Jersey City. “You’re getting to that period where investors have to recognize that these policies are beginning to wrap up.”

In Europe, the broad FTSE Eurofirst 300 index of top shares, which has shed 5 percent in the previous 12 trading sessions, ended Tuesday’s session 1.2 percent lower.

The news also sent United States Treasury yields higher, with the 30-year yield rising to a fresh 14-month high, according to Reuters data. The long bond last traded down 20/32 in price, with a yield of 3.407 percent.

Shares of Lululemon Athletica slumped more than 16.7 percent after the company’s chief executive said she would step down.

SoftBank said it would raise its offer for Sprint Nextel to $21.6 billion from $20.1 billion. Sprint was up 2.5 percent.

The S.P. 500 is up more than 15 percent since the start of the year, but markets have been bumpier since comments from the Fed chairman, Ben S. Bernanke, last month sparked uncertainty over the central bank’s timeline for slowing its $85 billion a month bond purchase program.

While the Bank of Japan left the door open to taking fresh steps to calm markets if borrowing costs spiked again, it did not appear to assuage investors. “The B.O.J. took some big steps and had some big changes but now that they’ve done that, the market is looking for even more,” Mr. Meckler said.

Seasonality was also playing a part in Tuesday’s weakness as equities tend to have less direction in the summer months, he said.

Shares in the Dole Food Company rose 21.7 percent after Dole received an unsolicited buyout offer from its chief executive.

The Catamaran Corporation climbed 10.3 percent after it signed a 10-year agreement with the Cigna Corporation.

Boeing raised its 20-year forecast for demand, saying airlines will need 35,280 new airplanes worth $4.8 trillion as the world’s fleet doubles. Boeing shares gained 0.3 percent.

Investors will also be watching a hearing by a German court on the legality of the European Central Bank’s bond-buying program.

In currencies, the dollar sank nearly 2 percent, to 96.83 yen, against the a resurgent Japanese currency by midmorning. The sell-off across the peripheral markets supported the euro, which was unchanged against the dollar at $1.3277 as investors retreated into cash.

In the debt market, investors pulled out of the riskiest assets, sending Greek 10-year bond yields up 75 basis points, to 10.22 percent. Portuguese equivalent bonds rose 34 basis points, to 6.59 percent.

The Greek government has failed to find buyers for its state-owned natural gas company, threatening the privatization goal set under the country’s bailout.

Article source: http://www.nytimes.com/2013/06/12/business/daily-stock-market-activity.html?partner=rss&emc=rss

Wall Street Ends Lower on Central Bank Fears

Stocks slumped on Tuesday after the Bank of Japan declined to take additional stimulus measures, a move that increased investors’ worries about the eventual decline in central bank support that has bolstered an equities rally.

At the end of Wall Street trading, the Standard Poor’s 500-stock index was down 1 percent in afternoon trading, the Dow Jones industrial average was off 0.8 percent and the Nasdaq composite was 1 percent lower.

The Bank of Japan kept monetary policy steady at the end of its two-day meeting, holding off on taking fresh steps to calm bond market volatility. Unhappy traders sent the Nikkei down 1.5 percent.

The lack of additional action rattled investors, underscoring worries about what would happen when the stimulus programs eventually go away. At the same time, nervousness remains over when the Federal Reserve may slow its measures, which have been a significant driver of this year’s stock market rally.

“This market has been fed by extremely supportive government policies around the world,” said Richard Meckler, president of the investment firm LibertyView Capital Management in Jersey City. “You’re getting to that period where investors have to recognize that these policies are beginning to wrap up.”

In Europe, the broad FTSE Eurofirst 300 index of top shares, which has shed 5 percent in the previous 12 trading sessions, ended Tuesday’s session 1.2 percent lower.

But United States Treasury prices turned higher on Tuesday, as the benchmark 10-year Treasury note, erasing a modest loss, was up 6/32 to yield 2.19 percent. The 30-year Treasury extended a gain to 24/32, allowing its yield to ease to 3.33 percent.

Shares of Lululemon Athletica slumped more than 17 percent after the company’s chief executive said she would step down.

SoftBank said it would raise its offer for Sprint Nextel to $21.6 billion from $20.1 billion. Sprint was up 2.4 percent.

The S.P. 500 is up more than 15 percent since the start of the year, but markets have been bumpier since comments from the Fed chairman, Ben S. Bernanke, last month sparked uncertainty over the central bank’s timeline for slowing its $85 billion a month bond purchase program.

While the Bank of Japan left the door open to taking fresh steps to calm markets if borrowing costs spiked again, it did not appear to assuage investors. “The B.O.J. took some big steps and had some big changes but now that they’ve done that, the market is looking for even more,” Mr. Meckler said.

Seasonality was also playing a part in Tuesday’s weakness as equities tend to have less direction in the summer months, he said.

Shares in the Dole Food Company rose 22 percent after Dole received an unsolicited buyout offer from its chief executive.

The Catamaran Corporation climbed 11 percent after it signed a 10-year agreement with the Cigna Corporation.

Boeing raised its 20-year forecast for demand, saying airlines will need 35,280 new airplanes worth $4.8 trillion as the world’s fleet doubles. Boeing shares fell 0.5 percent.

The yen extended its rally after the Bank of Japan’s lack of action, and the dollar traded as low as 95.68 yen for a 3 percent loss on the day.

The euro briefly traded above $1.33, but gains were pared headed into Europe’s stock market close, with the euro last trading at $1.3274, up 0.1 percent on the day.

In the debt market, investors pulled out of the riskiest assets, sending Greek 10-year bond yields up 75 basis points, to 10.22 percent. Portuguese equivalent bonds rose 34 basis points, to 6.59 percent.

The Greek government has failed to find buyers for its state-owned natural gas company, threatening the privatization goal set under the country’s bailout.

Article source: http://www.nytimes.com/2013/06/12/business/daily-stock-market-activity.html?partner=rss&emc=rss

Dow Ekes Out 8th Consecutive Gain in Otherwise Flat Trading

The stock market meandered on Tuesday, ending the day with little change, although the Dow Jones industrial average crept up to another nominal high.

The Dow, which has risen for eight consecutive trading sessions, added 2.77 points to close at 14,450.06 after wavering between small gains and losses for most of the day.

The broader Standard Poor’s 500-stock index ended down 3.74 points, or 0.2 percent, at 1,552.48. The Nasdaq composite index dropped 10.55 points, or 0.3 percent, to 3,242.32.

Stocks have surged this year as investors became encouraged by a recovery in the housing market and a pickup in hiring. Strong corporate earnings and continuing economic stimulus from the Federal Reserve are also supporting demand for stocks.

The Dow has gained 10.3 percent in 2013. Last week it surpassed its previous nominal high of 14,164.53. The S. P. 500 has risen 8.9 percent this year and is less than one percentage point from its nominal high close of 1,565.15, set in October 2007.

David Bianco, chief United States equity strategist at Deutsche Bank, said the S. P. 500 index would probably maintain its momentum in the coming weeks and surpass its nominal high. Strong first-quarter corporate earnings reports could also push the market higher.

“I wouldn’t be surprised if the market has a typical 5 percent pullback in the summer,” Mr. Bianco said. “But I think we go higher before that happens.”

The last significant downturn for stocks began before the presidential election in November, when the Dow fell 8 percent from Oct. 5 to Nov. 15 on investors’ concerns that a divided government in Washington might not be able to reach a budget deal to avoid sweeping tax increases and deep spending cuts.

Stocks have not had a correction, typically defined as a decline of 10 to 20 percent, since November 2011.

Peter Cardillo, chief market economist at Rockwell Global Capital, was among those saying investors should expect a pause in the market’s advance.

“Nothing goes up forever,” Mr. Cardillo said. “We will be headed for a correction somewhere along the line.”

Merck was the biggest gainer in the Dow, advancing $1.38, or 3.2 percent, to $45.04 after it said that a data safety monitoring board had recommended that a study of its cholesterol drug Vytorin should continue.

Among the stocks on the move, Yum Brands rose 89 cents, or 1.3 percent, to $68.73 after the company, which owns KFC, Pizza Hut and Taco Bell, announced a smaller-than-expected drop in its sales in China for January and February after a food scare over its chicken suppliers.

Diamond Foods slumped $1.71, or 9.7 percent, to $15.89 after the company reported disappointing second-quarter sales and offered an estimate for the rest of the fiscal year that also fell short of Wall Street estimates.

VeriFone Systems gained $1.22, or 6 percent, to $21.68 after the company, a leading maker of terminals for electronic payments, said late Monday that its chief executive would step down after recent stumbles cut the company’s stock price nearly in half.

Costco Wholesale rose $1.31, or 1.3 percent, to $103.75 after reporting that its fiscal second-quarter net income climbed 39 percent. Costco pulled in more money from membership fees, its sales improved and it recorded a large tax benefit. Even without the tax benefit, the results were better than analysts had expected.

Cabela’s, an outdoor retailer, gained $6.75, or 12.5 percent, to $60.65 after it said that it expected its first-quarter profit to exceed market expectations.

In the bond market, interest rates declined for the first time in seven trading sessions. The price of the Treasury’s 10-year note rose 12/32, to 99 27/32, while its yield dropped to 2.02 percent from 2.06 percent late on Monday.

Article source: http://www.nytimes.com/2013/03/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

DealBook: Mitsubishi Deal Aids Morgan Stanley’s Recovery

James P. Gorman has struggled to turn around Morgan Stanley since becoming chief executive.Chester Higgins Jr./The New York Times James P. Gorman has struggled to turn around Morgan Stanley since becoming chief executive.

James P. Gorman, the chief executive of Morgan Stanley, received some bad news earlier this year. A joint venture controlled by Mitsubishi UFJ Financial in Japan was facing huge losses, which would drag down earnings at the American investment bank.

But Mr. Gorman used the situation as leverage, striking a deal that frees Morgan Stanley from paying roughly $800 million a year to Mitsubishi, the costly overhang of a cash infusion made during the financial crisis.

Announced on Thursday, the agreement between the two banks removes a major financial burden on Morgan Stanley, which at the same time reported that first-quarter profit declined 48 percent from the period in the previous year. It also was a personal victory for Mr. Gorman, who has struggled to turn around Morgan Stanley since becoming chief executive in January 2010. In an internal note to employees, Mr. Gorman, 52, called the deal a “signature event” for the firm.

Under the terms of the transaction, Mitsubishi will trade most of its convertible preferred stock in Morgan Stanley for common stock. Once completed, Mitsubishi UFJ will own 385 million common shares, or roughly 10 percent of the company. The agreement requires approval from shareholders and regulators.

Although the firm still faces major obstacles in its recovery, investors welcomed the deal. Shares of Morgan Stanley closed at $26.48, up 1.69 percent, on Thursday.

Morgan Stanley reached out to Mitsubishi for a $9 billion lifeline during the depths of the crisis in 2008. In exchange for the money, the investment bank agreed to make quarterly dividend payments of roughly $200 million on Mitsubishi’s stake.

The firm was required to do so until the stock hit $37.875 for 20 out of 30 consecutive trading sessions — or until the two banks reached a new agreement. With the stock languishing below that target, Morgan Stanley insiders worried it could take years to reach that level.

For months, the Mitsubishi stake has been a source of aggravation for Mr. Gorman, who had inherited several headaches, some of which he dealt with by shedding nonessential divisions.

At a staff meeting in January, the chief executive expressed his frustration about the dividend payment. In response to questions about bonuses, he told employees that the firm needed to show restraint on compensation in part to appease shareholders and get the stock price up — generating an automatic end to the Mitsubishi payment.

When the news of the joint venture troubles crossed his desk around the same time, Mr. Gorman moved to use the information to his advantage. Ruth Porat, Morgan Stanley’s chief financial officer, who worked with Mr. Gorman and other senior Morgan executives on the latest deal, said the losses “took a logical discussion to the finish line.”

The parties were also cognizant that Goldman Sachs was moving to pay back a $5 billion crisis investment from Warren E. Buffett’s Berkshire Hathaway, which was completed this week.

In late March, Mr. Gorman flew to Japan to meet with executives of Mitsubishi and they reached an accord not long after. Morgan Stanley’s board voted to approve the pact this week.

The directors also met to review the firm’s first-quarter earnings, which Morgan Stanley released Thursday. Morgan Stanley posted a profit of $736 million, compared with $1.41 billion a year earlier. The results included a pretax loss of $655 million from the Mitsubishi joint venture.

The firm’s quarterly profit of 50 cents a share beat analysts’ expectations of 35 cents, according to Thomson Reuters.

Net revenue was $7.6 billion for the quarter, compared with $9.1 billion a year ago.

Although the Mitsubishi deal removes one obstacle to Morgan Stanley’s prospects, the firm still has plenty of work left on its turnaround, as it contends with a sluggish economic environment and a more restrictive regulatory regime. Its fixed-income and commodities division posted revenue of $1.77 billion, down 35 percent from year-ago levels. Asset management posted net revenue of $626 million, down 4 percent.

There were bright spots in the financials. Investment banking reported first-quarter revenue of $1.2 billion, up 15 percent from the period a year earlier. At the global wealth management division, which includes Morgan Stanley Smith Barney, revenue increased to $3.4 billion, from $3.1 billion a year ago.

Mr. Gorman struck an unusually positive note on the firm’s conference call with analysts, saying the changes he and his team had made over the last year or so were starting to pay off.

“We made clear progress increasing client share and this translated to financial performance. We have seen the benefits of our investments in hiring and the leadership as we execute across our businesses,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=fd55d841106c2584de0c7067bc4c282a