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Market Update

New Market Highs as Fed Finalizes Delayed Bank Capital Guidelines

Author: Nichole Harper
Last Update: 3:52 PM ET July 20 2015

3:50 PM – Market indexes on Wall Street traded higher and gold dropped to a new five-year low. Paypal Holdings began trading at a higher valuation from its parent eBay after the spin-off. Federal Reserve finalized capital increase plan for largest eight banks today.

Stocks on Wall Street opened higher on merger Monday and eBay Inc spu-off Paypal Holdings Inc.

On Wall Street, Tollbooth Strategy Index gained 0.2% or 23.94 to 10,900.92.

S&P 500 index edged up 1.86 to 2,128.51 and the Nasdaq Composite Index rose 0.2% or 8.68 to 5,218.74.

Crude oil in New York fell 28 cents to $50.61 a barrel and gold tumbled $25.40 to $1,106.50 an ounce.

The latest directive from the Federal Reserve put in place more restrains on largest eight U.S. banks and required to raise more capital.

However, the latest rule from the central bank calls for less increase in capital than earlier suggested last December and do not take full effect until the early 2019.

By one calculation, JPMorgan would need to raise additional capital of 4.5% assets; Citigroup’s estimated capital increase would be around 3.5%; Bank of America, Goldman Sachs and Morgan Stanley would need additional capital of 3%; State Street Corp 1.5%; and Bank of New York Mellon Corp. 1%.

Wells Fargo is estimated to need additional capital of 2%.

U.S. Movers

Morgan Stanley (MS) slid 1 cent to $40.19 after the financial services provider said net revenue in the second-quarter ending in June soared 12.8% to $9.7 billion from a year ago period.

Net income in the quarter declined 5.3% to $1.8 million or 85 cents per diluted share compared to $1.9 million or 92 cents from the same quarter last year.

The bank added wealth management revenues jumped 5.4% to $3.9 billion from $3.7 billion and revenues in investment management segment climbed 6.5% to $751 million from $705 million.

Fixed income & commodities sales and trading net revenues surged 30% to $1.3 billion from $1 billion a year ago.

Lockheed Martin Corporation (LMT) increased 1.3% or $2.67 to $203.85 after the defense contractor agreed to acquire Sikorsky Aircraft, the maker of Black Hawk helicopter a unit of United Technologies Corp for more than $8 billion.

The acquisition is expected to close by late fourth quarter 2015 or early first quarter 2016.

Separately, the company reported net sales in the second-quarter ending in June increased 2.6% to $11.65 billion from a year ago period.

Net income in the quarter jumped 4.5% to $929 million or $2.94 per diluted share compared to $889 million or $2.76 from the same quarter last year.

European Markets

In London trading, FTSE 100 index rose 0.2% or 17.60 to 6,792.69 and in Frankfurt the DAX index gained 1% or 115.40 to 11,788.58.

In Paris, CAC 40 index increased 0.8% or 39.68 to 5,164.07.

Alstom SA gained 0.7% to €26.98 after the France-based transport and energy infrastructure developer reported sales in the first-quarter ending in June climbed 8% to €1.60 billion form €1.49 billion in a year ago period.

Alstom said order received in the quarter tumbled 59% to €1.96 billion compared to €4.80 billion in the same period a year ago.

Aveva Group Plc surged 28.2% to 2,271 pence after the U.K.-based engineering software and services provider agreed to acquire industrial software division of France-based Schneider Electric SE in a reverse takeover.

The transaction is designed to meet the reverse takeover listing rules of the UK Listing Authority.

Aveva will receive £550 million in debt-free cash from Schneider for consideration of new shares and Schneider holds 53.5% stake in the new company that will design software for shipping, industrial plants and nuclear power stations.

Rolls-Royce Holding Plc rose 0.4% to 782.86 pence after the U.K.-based aircraft engines developer announced that it won two contracts from International AirFinance Corporation to provide Trent 700 engines worth $930 million for 20 Airbus A330 Regional aircraft.

The company also confirmed contracts to provide long-term engine maintenance services to Saudi Arabia-based airline Saudia worth about $1.3 billion.

Asian Markets

Markets in Tokyo are closed and observed Marine Day

Market indexes on Wall Street struggled after ACC and Ultratech, two largest cement companies in India, reported weakening sales and earnings in the latest quarter.

Rupee weakened 17 paisa to 63.64 against one U.S. dollar.

The Sensex Index fell 43.19 to close at 28,420.12. The CNX Nifty slid 6.40 to 8,603.45.

Two largest cement companies in India reported declining quarterly sales and earnings. INOX Leisure surged 15% after quarterly profit jumped four-fold.

CRISIL net rose 12%. Hindustan Zinc net jumped 12% on 21% increase in revenues.

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