Market Minute: Fed Asks JPMorgan and Goldman for Capital Plans
Banks are in the spotlight after a report from the Fed, and there are new concerns about a diabetes treatment.
Make it 10 in a row for the Dow, the longest winning streak since 1996. The blue chips jumped 83 points yesterday to yet another record high. The Nasdaq gained 13 points and the S&P 500 gained eight. It's now just two points shy of its all-time high.
JPMorgan Chase (JPM) and Goldman Sachs (GS) – two of the nation's biggest and most prestigious financial companies – were told by the Federal Reserve to submit new capital plans by the end of September. The Fed will then decide if they are in compliance with the rules on capital reserves.
Two other banks, BB&T (BBT) and Ally Financial are temporarily barred from paying dividends or buying back their stock. In all, 16 of the 18 largest banks in the US will be allowed to do so under the Fed's so-called stress test.
Several of them, including JPMorgan, wasted no time in announcing dividend hikes or stock buybacks. Citigroup (C) and Bank of America (BAC) will repurchase shares, while Wells Fargo (WFC) raised its payout. American Express (AXP), Bank of New York Mellon (BK) and Discover Financial (DFS) will do both.
Elsewhere, federal regulators are worried that newer types of drugs to treat Type 2 diabetes might cause pre-cancerous changes in the pancreas. The drugs are made by Merck (MRK), Bristol-Myers (BMY), Eli Lilly (LLY) and several smaller companies. The FDA says it needs more information to investigate.
Carnival Cruise (CCL) reports quarterly earnings this morning amid another mishap with one of its ships. The company is flying passengers back to the U-S after one of its ships lost power while at a Caribbean port.
Doughnut maker Krispy Kreme (KKD) says its quarterly earnings tumbled from a year ago, even though revenue increased. And retailer Aeropostale (ARO) posted a loss on weak sales during the holiday shopping period. It also surprised the Street by forecasting another loss in the current quarter.