FOX Business: The Power to Prosper
U.S. stocks landed in the red on Monday for the third session in a row as banks like Citigroup (NYSE:C) retreated amid concerns over slumping trading revenue and as enthusiasm over the Federal Reserve's decision to delay dialing back monetary stimulus continues to fade.
The Dow Jones Industrial Average fell 47.71 points, or 0.32%, to 15401.38, the S&P 500 dropped 8.07 points, or 0.47%, to 1701.84 and the Nasdaq Composite lost 9.44 points, or 0.25%, to 3765.29.
Stocks ended the day off their worst levels, but still with their first three-day losing streak since August 19.
The financial-services sector was the biggest loser, highlighted by Citi, which retreated 3% after the Financial Times reported the bank suffered a steep slump in trading revenue during the third quarter.
Other big banks like JP Morgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) also fell between 2% and 4%, highlighting earnings concerns in the sector.
Analysts at Atlantic Equities slashes their third-quarter U.S. bank earnings estimates due to a projected 20% drop in fixed income, currencies and commodities (FICC) trading revenue and a 55% plunge in mortgage revenue amid higher interest rates.
Asset managers like KKR (NYSE:KKR) and online brokers such as Charles Schwab (NASDAQ:SCHW) also suffered selloffs.
Monday's lone economic report revealed the U.S. manufacturing sector unexpectedly slowed down in September. The Markit flash purchasing managers index dipped to a three-month low of 52.8, down from 53.1 in August and below forecasts for a rise to 54.0.
The domestic PMI index was hurt by the slowest increase in new orders since April. A level above 50 indicates expansion.
On the other hand, tech stocks received a boost from Apple, which soared 5% after saying fourth-quarter revenue should come in at the high end of the company's forecast for $34 billion to $37 billion. The consumer electronics giant also revealed selling a record-breaking nine million new iPhone 5s and iPhone 5c models over the weekend.
Markets Eye Political Headlines
In Europe, despite surprising support for an anti-euro party, German Chancellor Angela Merkel appears set for a third term.
While her CDU party outperformed expectations, it failed to reach an absolute majority, meaning the party must find a coalition partner. Teaming up with the Social Democrats, the most likely partner, would likely signal Germany remains committed to the common currency.
"It may take a few weeks to sort this out, but Germany's European stance is unlikely to change," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, wrote in a note to clients.
Wall Street also welcomed four new members of the Dow on Monday as the biggest shake-up to the index in nearly a decade officially gets implemented.
As part of the sweeping change, Alcoa (NYSE:AA), Bank of America (NYSE:BAC) and Hewlett-Packard (NYSE:HPQ) are being replaced by Goldman, Nike (NYSE:NKE) and Visa (NYSE:V).
Meanwhile, Wall Street continues to react to the Federal Reserve’s surprise decision last week not to dial back monetary stimulus.
In a pair of speeches Monday morning, Fed officials William Dudley and Dennis Lockhart signaled they're not in a rush to taper quantitative easing, the central bank's bond-buying program.
On the domestic political front, Wall Street continues to closely monitor Washington's struggles to avoid a government shutdown and raise the debt ceiling. The latter event threatens to rattle markets as it did in 2011 when Standard & Poor's downgraded the country's credit rating.
"This crisis is sure to last until Christmas and thus could become a headwind for the economy -- maybe not a howling headwind, but in a recovery that's still fragile, this nonsense doesn't help," Greg Valliere, chief political strategist at Potomac Research Group, wrote in a note to clients.
In the commodities complex, crude oil has dropped 4.2% since Wednesday, its worst three-day decline in three months. Crude settled at $103.59 a barrel, down $1.16, or 1.11%. Gold declined $5.60 a troy ounce, or 0.42%, to $1,326.90.
BlackBerry (NASDAQ:BBRY), which had a market cap of $81.62 billion in June 2008, reached a $4.7 billion deal to be acquired by billionaire Prem Watsa's Fairfax Financial. The $9-a-share deal is subject to a six-week period of due diligence.
General Motors (NYSE:GM) plans to buy back $3.2 billion of preferred stock from VEBA, the United Auto Workers Retiree Medical Benefits Trust.
Wal-Mart Stores (NYSE:WMT) said it will hire 55,000 seasonal associates and transition another 35,000 temporary workers to part-time status for the holiday season.
The Euro Stoxx 50 slid 0.71% to 2906.35, the U.K's FTSE 100 lost 0.59% to 6557.37 and Germany's DAX dropped 0.47% to 8635.29.
In Asia, Japan's Nikkei 225 dropped 0.16% to 14742.42 and Hong Kong's Hang Seng declined 0.56% to 23371.54.