Top Financial Stocks
Financial stocks built on moderate gains Wednesday afternoon, with the NYSE Financial Sector Index rising about 0.3% while financial companies in the S&P 500 Index were climbing almost 0.9%. The Philadelphia Housing Sector Index was posting a nearly 1.5% gain.
In economic news:
As expected, the Federal Open Market Committee this afternoon unaminously voted to raise the target range for the Federal Funds rate to 1.50% to 1.75%. Following the FOMC announcement, new Federal Reserve chairman Jerome Powell somewhat spooked traders and eroded earlier gains for stocks by saying it's possible economic conditions could change enough for the central bank to either add or hold back on its plans for two more interest-rate increases during 2018. He also blamed the slow pace of wage growth on reduced productivity for U.S. workers and he downplayed the risks President Trump's plan to place tariffs on imported steel and aluminum could have on the broader U.S economy.
The U.S. current-account deficit increased by $26.7 billion during the final three month of 2017 to an as-expected $128.2 billion over a slightly revised $101.5 billion Q3 deficit, which benefited somewhat from $24.9 billion in hurricane-related insurance payments. As a percentage of gross domestic product, the Q4 deficit climbed to a still-moderate 2.6% from 2.1% during the previous quarter. The Q4 results include a big jump in the deficit for goods, reflecting rising imports of industrial supplies and consumer goods along with another drop in secondary income, reflecting a decrease in U.S. government transfers.
Existing home sales rose a larger-than-expected 3.0% over prior-month levels to a seasonally adjusted annualized 5.54 million sales pace, exceeding expert opinion expecting an annualized 5.42 million sales from January's 5.380 million total. On a year-over-year basis, existing home sales are up about 1.1%, reversing a 4.8% drop in January.
Among financial stocks moving on news:
- CBOE Global Markets ( CBOE ) declined Wednesday, at one point falling more than 3% to a session low of $116.00 a share, after analysts at JPMorgan Chase & Co. cut their stock rating for the financial derivatives exchange to Underweight from Neutral. The downgrade comes despite the company reporting a 1.7% and 24.8% rise, respectively, in total options and futures volume during February despite only 19 trading days last month, two less than in January. Year-over-year, the number of options and futures contracted traded in February were up 43.1% and 84.3% compared with February 2017.
In other sector news:
+ PPDAI Group ( PPDF ) has turned higher in Wednesday trade, reversing a more than 4% retreat soon after the opening bell, that followed the Chinese consumer lender also known as Paipaidai swinging to a Q4 net loss from a year-ago profit despite an 85% year-over-year increase in revenue during the final three months of 2017. The company reported a net loss attributable to ordinary shareholders of RMB1.3 billion, or about $200.4 million, compared with a RMB17.9 million profit last year. Revenue rose to RMB912.1 million from RMB492.3 million during the same quarter last year. Analyst estimates were not available for comparison.
+ The Blackstone Group L.P ( BX ) was narrowly higher Wednesday afternoon, retracing a portion of a nearly 1% mid-morning gain, that followed reports the asset manager, together with fellow shareholder and Thomson Reuters (TRI,TRI.TO), are considering either an initial public offering or for a private sale of an equity stake in their IPO or a sale of a stake in their Tradeweb Markets bond-trading platform, according to Bloomberg. The companies are valuing Tradeweb at more than $4 billion value, according to the Bloomberg report.
- Deutsche Bank AG ( DB ) Wednesday opened at their lowest level since November 2016 in U.S. trade, dropping almost 5% to a session low of $15.74 a share, following a Bloomberg report warning Deutsche's corporate and investment banking unit faces a $368 million (EUR300 million) "headwind from the currency effect." The unit also is expecting around EUR150 million in increased funding costs, prompting its co-head to caution investors the ongoing turnaround likely will "not be a one-quarter journey [but] a several year journey."