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Market Update

S&P 500 Touches New Record, Bank of America in Historic $16.5 B Settlement

Author: Nichole Harper
Last Update: 12:28 PM ET August 21 2014

12:25 PM New York U.S. market indexes traded higher after morning weakness. Bank of America agreed to pay $16.5 billion in fees and settlements to the U.S. Department of Justice. Family Dollar rejected $9 billion offer from Dollar General on anti-trust approval worries.

Stocks gained for the fourth day in a row and the widely followed S&P 500 index jumped to a new record high.

S&P 500 index increased 5.19 to 1,991.70 and the Nasdaq Composite index gained 2.06 to 4,528.54. The Dow Jones Industrial average added 0.4% and traded above 17,000.

The Dow and S&P 500 and the indexes are up in six of the last seven sessions.

Bank of America Corp agreed to pay $16.5 billion in settlement with the U.S. Justice Department. The settlement is the largest by a single company ever paid to the U.S. government.

The settlement includes $9.65 billion in fines and $7 billion in aid and contributions to homeowners and communities hit by the housing market crash between 2007 and 2009.

Most of the loans that had gone sour were assumed at the time of acquisition of Countrywide Financial Corp and Merrill Lynch & Co.

Bank of America has so far suffered $60 billion in losses and legal settlement costs from the acquisition of Countrywide, one of the largest subprime lender in the nation in the run up to the housing boom in the last decade.

European Markets

European markets traded higher and the index in UK gained 0.3% and in Paris added 1.1% but indexes in Spain declined 0.1%.

In London trading, FTSE 100 index rose 0.3% or 20.11 to 6,775.59 and in Frankfurt the DAX index jumped 0.8% or 75.49 to 9,390.06.

In Paris, CAC 40 index climbed 1.1% or 45.54 to 4,286.33.

GTECH arranged $10.7 billion bank loan to acquire U.S. based International Game Technology.

Kazakhmys net swung to profit $49 million and Raiffeisen Bank net surged 19% to 371 million.

Asian Markets

Stocks in Japan closed higher and extended two-week rise and the yen weakened.

Latest corporate earnings showed a rising trend helped by weak yen and rising global sales.

The latest flash purchasing managers'' index from Markit Economics revealed, manufacturing sector in Japan continued to expand at an accelerating pace in August to score of 52.4 following the 50.5 reading in July.

Among the individual components of the survey manufacturing output index swung to a rise after contracting in July.

The economy is forecasted to expand 2.9% in the current quarter ending in September after contracting 6.8% in the June quarter.

The Nikkei 225 Stock Average jumped 131.75 or 0.8% to 15,586.20 and the broader Topix index gained 11.55 to 1,291.19.

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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