WALL STREET STOCKS FALL ON ANALYST NOTE
US stocks closed weaker yesterday after an influential bank analyst recommended selling Wells Fargo, while the euro broke above $1.50 for the first time in 14 months on expectations US interest rates will stay low.
The Dow Jones industrial average closed 0.92 per cent lower at 9,948.83, after Rochdale Research analyst Richard Bove cut his rating on Wells Fargo’s stock , saying loan losses were mounting. The KBW bank index dropped 2.4 per cent. Shares of Wells Fargo slid 5.1 per cent to $28.90.
“It just shows you how susceptible we are to bad news right now,” said Stephen Massocca, managing director at Wedbush Morgan. “We’ve got such an extended stock market that a feather of news is enough to cascade it down 100 points.”
The San Francisco-based bank had reported a 60 per cent jump in third quarter profits earlier in the day. A wider-than-expected loss from Boeing also disappointed investors.
Morgan Stanley also reported better-than expected quarterly profit earlier in the day, citing strong fixed income sales and trading revenue and improved investment banking underwriting results, sending its shares up 6.9 per cent.
MSCI’s world stock index fell 0.24 per cent, in tandem with the US market.
The FTSEurofirst 300 index of top European shares rose 0.45 per cent, recouping almost all Tuesday’s losses and taking it near its highest close since 3 October, 2008.
Oil prices rose more than 3 per cent, above $81 a barrel, the highest in a year after US government data showed gasoline stockpiles fell a lot more than expected last week. This supported energy stocks and emerging economies, which are set to recover at a faster speed than some developed markets.
China’s voracious appetite for commodities and continued growth has helped countries such as Brazil, where heavyweight companies such as energy company Petrobras and miner Vale are tied to the trade in raw materials.
MSCI’s Latin American stock index rose 0.89 percent, easing from a 2.5 per cent gain earlier in the day.
US Treasury debt prices fell, with the benchmark 10-year US Treasury note down 12/32 to yield 3.38 per cent.
Treasuries also tracked European bond markets lower after comments from the Bank of England triggered a fresh round of anxiety about the eventual withdrawal of monetary stimulus and even interest-rate hikes
The dollar fell 0.75 per cent against a basket of other major currencies.