Trouble for Deutsche Bank and Wells Fargo drag down Wall Street
the S&P500 fell by 0.93%, the Dow Jones Industrial Average fell 1.07%, and the Nasdaq fell 0.93%. The stocks had halved their losses by the end of the session.
Shares of Deutsche Bank fell on reports that a dozen hedge funds limited their exposure to the bank. Reports of CNBC remain to be confirmed. Deutsche has been under the hammer since being fined $14 billion for mortgage-backed securities by the US Department of Justice earlier this month. Deutsche Bank fell to an all-time low after closing with losses of 6%.
Wells Fargo CEO John Stumpf was once again under scrutiny on Capitol Hill on Thursday, saying there had been no “orchestrated effort” at customer fraud. The bank has come under pressure to explain and correct a recent scandal in which its retail banking division created up to 2 million unauthorized customer accounts to meet sales targets. The bank has since agreed to a $185 million settlement with government officials as part of a sales fraud investigation.
Stumpf also said the bank would rescind all sales targets by the end of the week. Stumpf told the House Financial Services Committee that the bank no longer needed those goals to grow.
Wells Fargo may be in even more trouble over reports that the Justice Department is preparing to sanction the bank for repossessing military-owned cars. The bank could be hit with a fine of up to $20 million for alleged violations of the Military Civilian Assistance Act.
Late Wednesday, California State Treasurer John Chiang implemented a number of sanctions against Wells Fargo as punishment for unethical sales practices. The one-year sanctions suspend Wells Fargo from certain activities, including underwriting public debt.
Wells Fargo shares fell 2%.
The healthcare sector was another poor performer in markets on Thursday, dragged down by Mylan (MYL) – Get the report from Viatris, Inc. which remains under fire for its EpiPen pricing controversy. Three members of the Senate Judiciary Committee accused the company of classifying its lifesaving device as “generic” instead of branded to reduce Medicaid payments. The charge would put Mylan in violation of the False Claims Act. The stock fell more than 4%.
Other health care stocks were also lower on Thursday, including Johnson & Johnson (JNJ) – Get the Johnson & Johnson report , Pfizer (DFP) – Get the report from Pfizer Inc. , Merck (M.K.R.) – Get the report from Merck & Co., Inc. , Amgen (AMGN) – Get the report from Amgen Inc. and AbbVie (ABBV) – Get the report from AbbVie, Inc. . the Healthcare Select Sector SPDR ETFs
(XLV) – Get the SPDR Healthcare Sector Fund Report down nearly 2%.
Crude oil rose on Thursday, adding to strong gains seen on Wednesday, even as traders questioned the impact an agreement between the Organization of the Petroleum Exporting Countries would have on a surplus market. OPEC agreed to limit oil production to 32.5 million barrels per day following a three-day energy meeting in Algeria. The members had been reluctant to accept a deal and cede market share.
“Let’s not forget the non-OPEC producers who would not be subject to such an agreement if it were indeed ratified,” wrote Stephen Guilfoyle, chief economist at Stuart Frankel & Co., in a note. “Reducing production might just give market share to others who would happily grab it.”
West Texas Intermediate crude oil closed up 1.34% at $47.68 a barrel on Thursday, its highest level in a month. Technical analyst Helene Meisler from real money, The street‘s premium site for active traders writes that a sustained rise in oil would help the S&P 500 break out of a trading range it has been stuck in since July. Click on here to view its latest technical market reading.
The U.S. economy grew at a faster pace than initially expected, according to the final estimate of second-quarter GDP growth. The economy grew 1.4% in the quarter, compared to growth of 1.1% previously estimated. Consumer spending, which contributes two-thirds of the economy, rose 4.3% in the quarter.
A train crashed Thursday morning in the station in Hoboken, NJ, killing at least one person and injuring around 100, authorities said. New Jersey Transit tweeted earlier that NJ Transit rail service and PATH rail service would be suspended at the station until further notice. Hoboken is a hub for many Wall Street workers.
pier1 Imports (IRP) – Get a report rose more than 5% after reporting a lower-than-expected loss in its latest quarter. A net loss of 5 cents per share was a penny less than loss analysts had expected. The home goods retailer expects sales to decline 2% to 4% in the third quarter.
ConAgra (GAC) – Get the report from Conagra Brands, Inc. rose 7% after hitting a quarterly profit. Adjusted earnings of 61 cents per share were well above the 48 cents expected. Sales were weaker, with groceries and snacks down 5.4% and chilled and frozen goods down 8%.
Anheuser Busch (BUD) – Get the Anheuser-Busch InBev SA/NV report fell more than 1% on Thursday after U.S. officials fined $6 million to settle an investigation into its Indian operations. the Security and Exchange Commission accused the beer company of making improper payments to government officials in India. Technical analyst Bruce Kamish of real money, our premium site for active traders, writes that it will remain positive on BUD unless the stock – which was trading at $131.66 when last checked – returns to $126. Click on here to read his take on the stock.
Viacom (VIA.B) and SCS (SCS) – Get the Class B report from CBS Corporation were under scrutiny after National Amusements formally called on the two companies to consider a merger deal. News broke on Wednesday that Sumner Redstone, the majority shareholder of the two companies, had orchestrated the negotiations between the boards.