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.
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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.