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Market Update

Fed Rejects Goldman, JPMorgan Capital Plans; Gasoline Fuels CPI Increase


Author: Nichole Harper
ticker.com
Last Update: 11:24 AM ET March 15 2013

11:15 AM New York – U.S. stocks were under pressure after Federal Reserve asked JPMorgan and Goldman Sachs to resubmit their capital plans and rejected the plan by BB&T Corp and Ally Financial to return capital to shareholders.

Federal Reserve approved stock buyback and dividend plan of 14 banks and asked 4 other banks to meet higher set of requirements.

The central bank as a part of its second phase of annual stress tests o the 18 largest U.S. banks closely looked at the capital plans.

The Fed approved plans of 14 banks to buy back stocks and issue dividend and issued Goldman Sachs and JPMorgan conditional approvals.

The stress applied for banks considered stock prices to fall by 50% and unemployment surges to 12.1%.

Stocks declined after first hour of trading in New York on mixed economic reports and general weakness in European and Asian markets.

Consumer price index for February increased 0.7% from the previous month, more than 0.6% estimated by several economists. Core prices after excluding food and energy rose 0.2%.

Industrial production for February increased more than expected 0.7% and capacity utilization increased to 79.6%.

Federal Reserve Bank of New York’s Empire State index of manufacturing activity in March decreased 9.24.

U.S. consumer confidence unexpectedly declined in March according to the Thomson Reuters/University of Michigan preliminary sentiment index. The index fell to 71.8 from 78 in February.

The index was at its low since December 2011.

Markets in Europe declined across the European Union.

In London trading, FTSE 100 index fell 0.7% or 43.3 to 6,486 and in Frankfurt, the DAX index slid 0.5% to 41.7 to 8,017. In Paris, CAC 40 index slipped 0.8% or 30.4 to 3,841.

Stocks in Review

Banks were in focus after Federal Reserve reviewed capital plans at several banks.

JPMorgan Chase (JPM) decreased 2.5% after the Fed said the bank would need to resubmit capital distribution plans by the end of September.

Bank of America (BAC) increased 3.4% after the bank capital plan was approved by the Fed. The bank plans to buy back $5 billion of common stock and $5.5 billion in preferred stock.

Citigroup decreased 0.4% after the Fed approved its plan to buy back $1.2 billion of its common stock through the first quarter of 2014.

American Express (AXP) increased 1.1% after the charge card services provider was approved to buy back up to $4 billon of its common stocks in 2013 and increase its quarterly dividend by 15% to 23 cents a share.

Apple Inc (AAPL) rose 2% on speculation that the popular phones and gadgets maker will offer one time dividend to support its stock price and share cash with shareholders.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc