Stocks decline, hurt by declines in banks; Waiting for Fed
NEW YORK – Stocks were moderately lower Friday, pushed down, in part, by the price of oil. Investors continue to remain on edge regarding the possibility of the Federal Reserve raising interest rates at its meeting next week.
Banks also fell, led by a plunge in Deutsche Bank after the giant German lender said it wouldn’t settle with the Department of Justice over its handling of mortgage securities in the run-up to the 2008 financial crisis.
The Dow Jones industrial average fell 88.68 points, or 0.5 percent, to 18,123.80. The Standard & Poor’s 500 index fell 8.10 points, or 0.4 percent, to 2,139.16 and the Nasdaq composite fell 5.12 points, or 0.1 percent, to 5,244.57.
The U.S.-listed shares of Deutsche Bank dropped $1.38, or 9 percent, to $13.38 after the bank said it did not intend to pay the $14 billion settlement that the U.S. government asked for. Federal regulators have been looking to settle with Deutsche Bank, as it has done with the other major Wall Street firms like Goldman Sachs and JPMorgan Chase & Co., for its role in the mortgage bubble and financial crisis.
Other European banks fell as well. Royal Bank of Scotland Group fell 30 cents, or 6 percent, to $4.86.
The news out of Deutsche Bank dragged European stocks lower, with Germany’s DAX closing down 1.5 percent, France’s CAC-40 index down 0.9 percent and the U.K.’s FTSE 100 index down 0.3 percent.
Stocks have been volatile this week, with the Dow moving more than 100 points four out of five days. Most of the volatility has come as investors prepare for next week’s Fed meeting. While most investors do not expect a rate increase, there is a small but noticeable likelihood there will be one.
“By the Fed’s own criteria, everything is in place for them to raise rates. But still, people don’t think they are going to raise rates, so the market is in conflict,” said David Kelly, chief global investment strategist at JP Morgan Asset Management.
In other company news, pharmaceutical company Novavax plunged $7.05, or 85 percent, to $1.29 after the company said its experimental vaccine failed in late-stage clinical testing. Novavax has no active products on the market and this drug was their furthest in development.
Intel rose $1.11, or 3 percent, to $37.67 after the company raised its revenue forecasts, citing stronger-than-expected demand for personal computers.
The S&P 500 is adding a new industry to its traditional groups for the first time since the dotcom era. The benchmark stock index will now have a real estate sector, which will be split off from the financial services component. The new industry component will be effective at the end of trading Friday. After the split, the S&P 500 will have 11 industry sectors.
The 10 current sectors of the S&P 500 are: financial services, information technology, energy, industrials, consumer discretionary companies, materials, telecommunications, consumer staples, health care and utilities.
Benchmark U.S. crude lost 88 cents to $43.03 per barrel in New York. Brent crude, used to price international oils, fell 82 cents to $45.77 per barrel. Heating oil fell 1 cent to $1.41 a gallon, wholesale gasoline rose 3 cents to $1.46 a gallon and natural gas rose 2 cents to $2.948 per 1,000 cubic feet.
The yield on the 10-year Treasury note was mostly unchanged at 1.69 percent. The euro fell to $1.1151 from $1.246 and the dollar rose to 102.42 yen from 102.16 yen.
In metals, gold fell $7.80 to $1,310.20 an ounce, silver fell 18 cents to $18.86 an ounce and copper was unchanged at $2.16 a pound.