Financial Sector Update for 03/09/2018: ACGL,AIG,GS,CLDT,HFWA

Top Financial Stocks

JPM +2.68%

BAC +1.41%

WFC +2.45%

C +2.53%

USB +2.36%

Financial stocks still were sharply higher in late trade, with the NYSE Financial Sector Index rising almost 1.5% while financial companies in the S&P 500 Index were increasing over 2.2%. The Philadelphia Housing Sector Index also was posting a more than 1.4% advance.

In economic news:

Non-farm payrolls grew by a whopping 313,000 jobs during February, swamping market expectations for just 205,000 new hires. The unemployment rate was unchanged at 4.1% but the labor participation rate rose by 0.3 percentage points to 63.0%, also exceeding expert projections looking for the rate to remain at January's 62.7% pace. The U.S. Labor Department also revised its employment levels for the prior two months, including raising January hiring by an extra 39,000 workers over the 200,000 new employees initially reported in the previous report. Wages continued to be the lone disappointment in the February numbers, rising only 0.1%. That compares with a 0.3% gain in January and lagging market expectations for a 0.2% advance although the February shortfall for paychecks should keep the Federal Reserve from picking up the pace of its interest rate increases.

Wholesale inventories jumped 0.8% in January over the prior month, building on an upwardly revised 0.7% - from initial reports finding a 0.4% rise - and squeaking by expert opinion also looking for a 0.7% rise for the first month of 2018. Sales for the wholesale sector began the new year with a 1.1 decline, snapping a lengthy string of month-over-month increases. The sector's stock-to-sales ratio rose to 1.26 from 1.23 previously, likely indicating less inventory building in upcoming months.

Among financial stocks moving on news:

-Arch Capital Group Ltd. ( ACGL ) was edging lower in late trade, continuing to swing between small gains and losses after the property, casualty and mortgage insurance and reinsurance company priced a $502.5 million secondary offering of 5.67 million shares by investors affiliated with American International Group Inc. ( AIG ) at $88.55 apiece, or just 0.2% under Thursday's closing price for the company's stock. The company will not receive any proceeds from the offering.

In other sector news:

+ Goldman Sachs ( GS ) was up almost 2% in mid-day trade, staying within close range of its Friday session high of $271.09 a share, following reports Lloyd Blankfein is preparing to step down as chief executive at the bulge bracket investment bank after 12 years in the post, according to the Wall Street Journal.

+ Chatham Lodging Trust ( CLDT ) was rising Friday, climbing over 1% to a session high of $19.19 a share and the real estate investment trust receiving a boost after saying it successfully refinanced its $250 million senior unsecured revolving credit facility. The new unsecured revolving credit facility extends the maturity date by an extra three years until 2023 and also lowers its borrowing costs by up to 15 basis points compared with the company's existing $250 million facility, setting a rate of LIBOR plus 1.65%. Chatham has only $13.8 million in debt maturing between now and 2023, according to chief operating officer Dennis Craven.

- Heritage Financial ( HFWA ) was turned lower this afternoon, giving back a 1% increase that initially followed the bank holding company late Thursday announcing a definitive agreement to acquire Premier Commercial Bancorp for about $88.6 million in Heritge stock. Under terms of the proposed transaction, Premier shareholders will receive about 0.4862 of a Heritage share for each share they currently own. The deal values Premier at $15.12 a share based on Heritage's $31.10 a share closing price Thursday and Premier shareholders will own about 7.7% of the combined companies after the acquisition concludes. The companies are expecting a Q3 close, pending shareholder and regulatory approvals as well as other customary closing conditions.

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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