Stocks Slip After Energy Slide, Yellen Comments

Hewlett-Packard Enterprise Rings The NYSE Opening Bell For The First Day Of Regular-Way Trading
NEW YORK — U.S. stocks edged lower Wednesday, retracing recent gains along with energy shares, while comments by Federal Reserve Chair Janet Yellen pointing to a possible rate hike in December added to investor caution.

S&P energy, down 1 percent, led the day’s decline.

The fall snapped a run of five straight days of gains for the index, with shares of Chevron (CVX) down 1.4 percent at $96.77 and Exxon Mobil (XOM) down 1 percent at $85.98.

Stocks added to losses after Yellen’s comments, which caused investors to reset their expectations of a December rate hike above 60 percent.

Yellen said December remains a “live possibility” for a rate increase, and William Dudley, the president of the New York Fed and a permanent voting member of the Fed’s policy panel, said later on Wednesday that he would “completely agree” with Yellen.

Still, S&P utilities, which tend to fall in a higher-interest rate environment, were up 0.4 percent, the day’s best-performing sector.

The market is consolidating after a big rally, said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

“The gains have been strong over the past five weeks and we’re due for more of a breather here,” said O’ Rourke.

The Dow Jones industrial average (^DJI) fell 50.57 points, or 0.3 percent, to 17,867.58, the Standard & Poor’s 500 index (^GSPC) lost 7.48 points, or 0.4 percent, to 2,102.31 and the Nasdaq composite (^IXIC) dropped 2.65 points, or 0.05 percent, to 5,142.48.

Stocks rallied after the Fed’s statement last week, when it signaled a December rate hike was still on the table, yet the ongoing debate over when the Fed will actually make its move has added uncertainty to the market.

“It’s really that uncertainty — investors don’t know whether to applaud a rate hike or to fear it,” said Bruce Zaro, chief technical strategist, Bolton Global Asset Management in Boston.

A raft of data released Wednesday suggested the economy was strong enough to support ending an era of near-zero interest rates.

The ADP National Employment Report showed U.S. private employers maintained a steady pace of hiring in October, while data from the Institute for Supply Management showed a jump in new orders buoyed activity in the services sector.

The reports come ahead of Friday’s nonfarm payrolls data, the most widely watched U.S. economic indicator.

Movers and Shakers

Time Warner (TWX), down 6.6 percent at $72.20, weighed on the S&P 500 the most after the company said ratings for its “key” domestic entertainment networks have dropped more than anticipated, while shares of Twenty-First Century Fox (FOXA) dropped 5.2 percent to $29.65 after it reported lower-than-expected quarterly revenue.

Other media stocks such as Disney (DIS), Viacom (VIA) and Discovery (DISCA) also fell.

U.S. health insurers also slid, with UnitedHealth (UNH) falling 2.6 percent to $114.64.

Groupon (GRPN) lumped 26.3 percent to $2.97 after it forecast weak fourth-quarter and 2016 revenue.

Declining issues outnumbered advancing ones on the NYSE by 1,849 to 1,214, for a 1.52-to-1 ratio on the downside; on the Nasdaq, 1,398 issues fell and 1,362 advanced for a 1.03-to-1 ratio favoring decliners.

The S&P 500 posted 16 new 52-week highs and 1 new low; the Nasdaq recorded 69 new highs and 43 new lows.

Sinead Carew contributed reporting from New York.

What to watch Thursday:

  • At 8:30 a.m. Eastern time, the Labor Department releases third-quarter productivity data and weekly jobless claims
  • Freddie Mac releases weekly mortgage rates 10 a.m.

Earnings Season
These selected companies are scheduled to report quarterly financial results:

  • Fiat Chrysler Automobiles (FCAU)
  • Kraft Heinz Co. (KHC)
  • Molson Coors Brewing Co. (TAP)
  • Monster Beverage (MNST)
  • Nvidia (NVDA)
  • Ralph Lauren (RL)
  • Symantec (SYMC)
  • Toyota Motor (TM)
  • TripAdvisor (TRIP)
  • Walt Disney Co. (DIS)

Wells Fargo to Pay $81.6 Million to Bankrupt Homeowners

JPMorgan Chase & Co. And Wells Fargo & Co. Bank Branches Ahead Of Earnings

NEW YORK — Wells Fargo (WFC) will pay $81.6 million to homeowners for denying them a chance to challenge mortgage payment increases imposed during their bankruptcy proceedings, the U.S. Justice Department said Thursday.

Wells violated a 2011 U.S. bankruptcy law by failing to send a type of legal notice about homeowners’ mortgage payment increases to bankruptcy courts. The law requires the notice to include disclosures to ensure that fees and charges by banks to homeowners in bankruptcy proceedings are accurate, the Justice Department said.

The settlement between Wells Fargo and the Justice Department’s U.S. Trustee Program, which oversees the U.S. bankruptcy system, also requires Wells to hire an independent compliance monitor and change its internal procedures to prevent a recurrence of the problem, the Justice Department said.

The settlement is subject to approval by the U.S. Bankruptcy Court for the District of Maryland.

If approved, the Justice Department said it will distribute the funds to groups of homeowners who were in bankruptcy proceedings from late 2011 through March, 2015.

“We believe we have made the necessary investments and improvements in our systems and processes to ensure that payment change notices for the bankruptcy court and escrow analyzes for customers in bankruptcy are properly prepared and delivered in a timely fashion,” Michael DeVito, executive vice president for Wells Fargo Home Mortgage, said in a statement.

The bank will work with the U.S. Trustee’s office and independent compliance reviewer to demonstrate the effectiveness of its changes and make payments to customers, DeVito said.

Wells previously put aside reserves for the settlement, it said.

The bank was late in providing more than 100,000 notices to homeowners about mortgage payment changes and also did not timely perform more than 18,000 escrow analyzes in cases involving nearly 68,000 accounts of bankrupt homeowners during the period, the Justice Department said.

Market Wrap: Stocks End Flat as Fed Rate Hike Eyed

Jeh Johnson Rings Opening Bell At New York Stock Exchange
NEW YORK — U.S. stocks ended little changed Friday, with a rise in financials countered by a slide in utilities and other sectors, as Wall Street took the strong U.S. jobs report as evidence the Federal Reserve will soon raise interest rates.

Since the Fed last week opened the door to a rate increase in December, investors have been looking to economic reports for clues to whether the central bank will take action. Data released Friday showed U.S. non-farm payrolls growth in October was the best since December 2014, while the unemployment rate fell to 5 percent, the lowest since April 2008.

While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time.

The three major indexes posted higher weekly performances for the sixth week in a row, after posting their best monthly results in four years in October.

The overall market Friday was “holding up well,” Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois, who noted that a Fed action would indicate the economy is healthy enough to tolerate higher rates.

“While higher interest rates themselves are not a good thing, a vote of confidence in the strength of the economy I think is going to overshadow that over time,” Jankovskis said.

The Dow Jones industrial average (^DJI) rose 46.9 points, or 0.3 percent, to 17,910.33, the Standard & Poor’s 500 index (^GSPC) lost 0.73 points, or 0.03 percent, to 2,099.2 and the Nasdaq composite (^IXIC) added 19.38 points, or 0.4 percent, to 5,147.12.

The S&P financial sector rose 1.1 percent, leading all sectors. Banks tend to benefit from higher borrowing rates, and shares of JPMorgan (JPM), Bank of America (BAC) and Citigroup (C) each climbed at least 3 percent, making them the biggest positive influences on the S&P.

The rate-sensitive utilities sector dropped 3.6 percent, the worst performing group. The S&P consumer staples sector fell 1.1 percent, while the energy group dipped 0.4 percent as crude oil prices were down.

Focus on Rate Increase

“The market is reacting today as if rates will be increased in December,” said Ben Halliburton, chief investment officer at Tradition Capital Management in Summit, New Jersey.

“They’re rotating money to take advantage of that or cut back where they’re not going to be advantageous,” Halliburton added.

Alibaba (BABA) fell 2.1 percent to $83.61 after a CNBC report said short-seller Jim Chanos pitched the company as a possible short.

Shares of Disney (DIS) rose 2.4 percent to $115.67 after it reported a higher-than-expected profit.

ZS Pharma (ZSPH) shares jumped 40.6 percent to $89.04 after Britain’s AstraZeneca (AZN) agreed to buy the biotech company for $2.7 billion.

Tableau Software (DATA) shares jumped 21.4 percent to $102.44 after higher-than-expected results, with other data analytics stocks also rising.

Declining issues outnumbered advancing ones on the NYSE by 1,931 to 1,186, for a 1.63-to-1 ratio on the downside; on the Nasdaq, 1,726 issues rose and 1,086 fell for a 1.59-to-1 ratio favoring advancers.

The S&P 500 posted 15 new 52-week highs and 9 new lows; the Nasdaq recorded 151 new highs and 70 new lows.