Fed-Induced Bloom Fades at the Dow
The Dow Jones Industrial Average has slumped since yesterday afternoon's rally, as some unexpectedly dour economic news items cause the jubilation over the Federal Reserve's taper announcement to fade into the background.
Estimates missed on jobs, housing
The Department of Labor started the morning off on a sour note, reporting an increase in initial jobless claims last week. Unemployment claims jumped from 369,000 in the prior week to 379,000, which was a far cry from analysts' prediction of 337,000.
The Philadelphia Fed Business Outlook came in below expectations as well, registering 7 compared to an expected reading of 10, although it did increase slightly from November's result of 6.5.
Housing news was also glum, with Freddie Mac noting an upswing in the 30-year fixed-rate mortgage to 4.47% this week, versus 4.42% for the previous week. The real kicker was the National Association of Realtors report that existing-home sales fell last month. The seasonally adjusted annual rate of 4.90 million sales in November contrasted sharply with the 5.12 million logged for October, and represented a 1.2% drop from the year-ago number of 4.96 million.
One bright spot was the Bloomberg Consumer Comfort Index, which registered a jump from -30.9 last week to -29.4 currently, the highest reading since September. The rise in sentiment is expected to boost holiday spending, giving retailers a lift.
Banks move up, despite some bad press
Big banks JPMorgan Chase and Goldman Sachs are getting greener, though both are facing some investor unrest and additional legal troubles. Some religious shareholder groups are pressing JPMorgan, Bank ofAmerica, and Wells Fargo to share the steps they have taken to avert future claims of "unethical activities".
Members of the Interfaith Center on Corporate Responsibility have sent shareholder proposals to the three big banks, and meetings have been planned to discuss the issue. Goldman Sachs and other banks have also received meeting requests. The proposals may or may not make it onto the annual meeting ballots in the spring.
Big banks face additional legal action regarding the Facebook initial public offering last year. A federal judge in Manhattan ruled that a slew of banks, including JPMorgan Chase and Goldman Sachs, will face a lawsuit by shareholders alleging that investors were misled regarding the financial health of the social media giant prior to the IPO. Facebook executives, including CEO Mark Zuckerberg and COO Sheryl Sandberg, were also named in the lawsuit.
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