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Financial Sector Update for 03/05/2018: CTRE,HTGC,XL,CFG

Top Financial Stocks

JPM +1.85%

BAC +1.98%

WFC +0.33%

C +1.25%

USB +1.10%

Financial stocks were advancing to begin the new week, with the NYSE Financial Sector Index rising over 1.1% while financial companies in the S&P 500 Index were climbing almost 1.7%. The Philadelphia Housing Sector Index was almost 0.7% higher in recent trade.

In economic news:

The U.S. markets were edging higher Monday despite President Donald Trump Monday giving few signs yet he was backing away from his March 1 threat of placing a 25% tariff on imported steel and a 10% tariff on aluminum coming into the United States and potentially sparking a global trade war. In a tweet last night, Trump said, "We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it's time for a change!" and this morning he suggested that the only way he would rescind the tariffs "if new & fair NAFTA agreement is signed."

Also, the Purchasing Managers index final reading for the U.S. services sector rose to an as-expected 55.9 in February, climbing 2.6 points from the final January reading. Growth was spread across almost all sectors, with backlog orders piling up for a third straight month to a nearly three-year high while prices also accelerated and input costs rose to a 30-month high. Hiring also remains solid with business optimism staying at its 13-year high, the survey found. The ISM non-manufacturing index for February was similiarly strong, easing 0.4 points to a 59.5 reading, topping expert opinion looking for a 58.8 February score. Among individual components, new orders came in a 64.8 while new export orders also reaching an unusually strong 59.5 reading. and backlogs kept building to 56.0 last month.

Among financial stocks moving on news:

(+) CareTrust REIT ( CTRE ) was more than 1% higher in late Monday trading, retracing over half of a slightly more than 2% rise to a session high of $13.48 a share, that followed the real estate investment trust saying it purchased a 464-bed, five-property portfolio of skilled nursing facilities in the greater Grand Rapids, Mich., area for around $41.5 million, inclusive of transaction costs. The properties currently are generating about $3.7 million in yearly rental revenue, with rent escalators tied to the consumer price index. The lease has a 15-year term plus a pair of five-year renewal options. CareTrust used a combination of cash on hand and its $400 million unsecured revolving credit facility to fund the transaction.

In other sector news:

(+) XL Group Ltd ( XL ) Monday raced to its best share price in over 10 years, climbing over 30% to reach $56.39 a share, after the insurance and reinsurance carrier agreed to a $15.3 billion buyout offer from French insurer AXA (CS.PA). Under the terms of the deal, XL Group investors will receive $57.60 in cash for each of their shares, representing a 33% premium over Friday's closing price for the company's stock.

(+) Hercules Capital ( HTGC ) was hanging on to a small gain Monday, rising more than 1% to a session high of $12.08 a share, after the specialty finance company Monday announced it has acquired Gibraltar Business Capital, which provides working capital to small and mid-market businesses. Financial terms of the deal were not disclosed but Hercules said it expects the deal will immediately add to its per-share earnings and generate a cash yield of 10% to 14%.

(-) Citizens Financial Group ( CFG ) was moderately lower Monday, sinking almost 2% to a session low of $43.38 a share, after saying its commercial real estate subsidiary signed a referral agreement with PGIM Real Estate Finance, creating an additional source of long-term permanent financing opportunities for its clients. The commercial real estate unit generated about $11.2 billion in loans during 2017, a 15% increase over prior-year levels. It also was a Top 10 real estate deal bookrunner by deal count, according to Thomson Reuters.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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