Financial Stocks Recoup Some Losses On NY Fed Speaker - Financials Roundup

Features Dow Jones Newswires

Banks, lenders and other financial companies recouped some of their losses after Federal Reserve Bank of New York President William Dudley left open the possibility of a December rate hike. Mr. Dudley said it was unclear when the next hike would occur but didn't rule out another hike this year. Fears that bond investors are seeing a different economic outlook to stock investors are misplaced, according to one brokerage. "No disconnect between stocks & bonds," said analysts at brokerage Bank of America Merrill Lynch Global Research, in a note to clients. "Best explanation for low yields & high stocks [is] $1.96 trillion of central bank purchases of financial assets in 2017 alone (central bank balance sheets up $11.26 trillion since Lehman to $15.6 trillion)." Another explanation is that low inflation has been the main focus of Treasury investors, while high earnings-per-share is the main focus of stock investors. As the Fed's Dudley noted Friday, low inflation isn't necessarily a negative sign for the economy, as long as low demand isn't the underlying cause. Shares of Equifax plunged after the credit-reporting agency reported a massive data breach, affecting more than half the adult population of the U.S.

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-Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

September 08, 2017 16:48 ET (20:48 GMT)