Good News for Goldman Sachs Adds to Dow's Optimism

Before you go, we thought you'd like these...
Before you go close icon

The Dow Jones Industrial Average is doing fine this morning, remaining in the green despite some not-so-great news regarding confidence levels reported mid-morning.

The Conference Board announced a drop in its October consumer confidence metric to 71.2, down from 80.2 in September. The report noted that the government shutdown and debt ceiling fracas took its toll on consumers' outlook -- and the temporary fixes put in place will likely continue to depress how consumers feel about the economy.

State Street's Investor Confidence Index wasn't any more uplifting, showing a decrease of 5.6 points from September's reading of 101.3 to October's 95.7. Once again, blame for the dour outlook of investors worldwide was laid at the doorstep of the U.S. government, and its fiscal sideshow earlier this month.

Goldman rises, JPMorgan not so much
In the banking sector, Goldman Sachs is up by nearly 0.3% this morning, possibly due to the news of the hefty paycheck it expects from the initial public offering of Twitter. The Wall Street Journal reported today that Goldman will likely take in 38.5% of the fees associated with the social media company's IPO -- more than double the amount of any of its cohorts also involved in the deal. At share price offerings of between $17 to $20, this would translate into a cool $20 million payday for Goldman Sachs.

JPMorgan Chase is just turning positive one hour before noon, and this bank also stands to make a pretty penny from the Twitter IPO. Although only taking 15% of the deal, JPMorgan will do better than Bank of America, which will get only 8%.

At this point, any good news for JPMorgan Chase is welcome, though after settling up with federal regulators this weekend in regard to toxic mortgage-backed securities it sold to government-sponsored entities Fannie Mae and Freddie Mac before the financial crisis, investors are likely sighing in relief.

Fitch Ratings weighed in on the $4 billion settlement between JPMorgan and the Federal Housing Finance Agency earlier today, noting that the high penalty agreed to by JPMorgan Chase will likely force other banks in this situation to settle for higher amounts than they may have originally intended.

For some, this may mean increasing litigation reserves. So, as investors continue to bid up JPMorgan's share price -- it has gained more than 0.4% shortly before noon -- stockholders of banks like Wells Fargo and Bank of America can now wonder what they are in store for, while JPMorgan puts the worst of its own legal mess with the FHFA behind it.

Is this the bank to buy?
Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

The article Good News for Goldman Sachs Adds to Dow's Optimism originally appeared on

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America, Goldman Sachs, and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading