Dow, S&P 500 ease as bank earnings disappoint

Dow, S&P 500 ease as bank earnings disappoint
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By Chuck Mikolajczak

NEW YORK Thu Jan 16, 2014 7:28am EST

1 of 2. Traders work on the floor of the New York Stock Exchange January 10, 2014.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) – Stock index futures were little changed on Thursday after closing at a record high in the prior session, ahead of data on the labor market and earnings from Goldman Sachs and Citigroup.

After a lackluster start to the new year on concerns stock valuations may be extended, the S&P 500 .SPX has risen 1.6 percent over the past two sessions as data indicated an improving economy, soothing concerns in the wake of a disappointing payrolls report last week.

At 8:30 a.m., investors will eye initial jobless claims data for signs of strength in the labor market. Estimates call for weekly claims of 328,000, down slightly from the 330,000 reported last week.

Earnings are due from 12 S&P 500 components on Thursday, including Goldman Sachs Group Inc (GS.N) and Citigroup Inc (C.N). BlackRock Inc (BLK.N) shares gained 3.5 percent to $ 323.75 in light premarket trade after the world’s largest money manager reported fourth-quarter results.

S&P 500 futures fell 1.3 points and were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures declined 4 points and Nasdaq 100 futures added 3 points.

Data on manufacturing and the housing market is due later in the session at 10 a.m. ET. The Philadelphia Federal Reserve’s gauge of manufacturing activity in the Mid-Atlantic region for January is expected to show a reading of 8.6 versus the 6.4 in the prior month. The National Association of Home Builders housing market index for January is expected to show a 58 reading, equal to the December reading.

Best Buy Co Inc (BBY.N) shares plunged 17.5 percent to $ 31 in premarket trade after the electronics retailer posted holiday sales results and its fourth-quarter outlook.

Apollo Global Management LLC (APO.N) said it would buy CEC Entertainment Inc (CEC.N), the parent of Chuck E Cheese restaurant chain, for about $ 948 million.

European equities edged lower early after climbing to a 5-1/2-year high in the previous session, with poor sales number from Dutch grocer Ahold (AHLN.AS) and a cautious outlook from Dixons (DXNS.L) hurting retailers. .EU

Australian shares .AXJO led the charge higher in Asia, with a gain of 1.2 percent, while MSCI Asia-Pacific ex-Japan Index .MIAPJ0000PUS added 0.1 percent as the dollar rose to a one-week high against the yen.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

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Stocks are mixed following earnings from retailers

Stocks are mixed following earnings from retailers

NEW YORK (AP) — Stocks were mixed on Wall Street Tuesday as investors digested another round of corporate earnings, this time from retailers including Home Depot, Best Buy and the parent company of T.J. Maxx.
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Energy bills have risen at EIGHT times the rate of average earnings

Energy bills have risen at EIGHT times the rate of average earnings
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By Adam Uren

PUBLISHED: 10:18 EST, 17 November 2013 | UPDATED: 10:50 EST, 17 November 2013

Energy bills have risen at a rate eight times higher than average earnings over the past three years, according to Citizens Advice.

The charity has found that the ‘Big Six’ suppliers have increased their gas and electricity prices by on average 36 per cent since October 2010, during which time earnings have risen by a measly 4.4 per cent.

Prices have also easily outstripped the rate of inflation as well, almost four times the 10.2 per cent increase in the last three years.

Rise: Energy bills have risen by 36 per cent in the last three years.

Energy firms have shown no sign of putting a stopper on rises either, with recent announcements seeing rises of up to 10.4 per cent set to come in this winter, and Citizens Advice fears that people are racking up serious debts to pay for their winter energy bills.

Chief executive Gillian Guy said: ‘Enormous escalations in energy prices are creating a desperate situation in many households.

‘People find they do not have enough money coming in to pay for everyday essentials as increases in daily costs are outstripping low rises in earnings.

‘As we head into winter, and the latest price rises begin to kick in, more and more people are likely to reach crisis point as they struggle to heat their homes and feed their families.

‘People should not have to get into debt in order to have a warm home.  Energy companies and the Government need to look at how they can reduce the pressure energy bills are putting on people’s finances.’

Energy providers have been attempting to pin the blame for rising costs on green taxes levied by the Government, but energy secretary Ed Davey told the Mail on Sunday today he feels these firms may be ‘too profitable’.

The Big Six of British Gas, E.On, SSE, npower, EDF Energy and Scottish Power were hauled before a committee of MPs last month to explain their margins, and people are increasingly being encouraged to switch their energy plans to smaller and cheaper suppliers.

Citizens Advice said that 28 per cent of people who seek help with an energy problem also have a debt issue, with half of these in debt to their energy suppliers, while others have card or personal loan debts.

Ms Guy thinks green levies on energy companies should instead be raised via taxation to make it fairer on those struggling to stay afloat.

She said: ‘It’s absolutely essential that families on low incomes and pensioners get the necessary help to stay warm so I urge the Government not to cut the support that is currently available.

‘Levies are adding an unfair financial burden to poorer households.  Paying for these costs through taxation would be a much fairer approach and would avoid low income households funding.’

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US banks report record earnings of $40.3B for Q1

FILE – In this Tuesday, Jan. 15, 2013, file photo, lights are on at Goldman Sachs’s headquarters, in New York. The FDIC issues the U.S. banking industry’s financial results for the January-March quarter, on Wednesday, May 29, 2013. (AP Photo/Mark Lennihan, File)

FILE – In this Tuesday, Jan. 15, 2013, file photo, lights are on at Goldman Sachs’s headquarters, in New York. The FDIC issues the U.S. banking industry’s financial results for the January-March quarter, on Wednesday, May 29, 2013. (AP Photo/Mark Lennihan, File)

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WASHINGTON (AP) — U.S. banks earned more from January through March than during any quarter on record, buoyed by greater income from fees and fewer losses from bad loans.

The banking industry earned $ 40.3 billion in the first quarter, the Federal Deposit Insurance Corp. said Wednesday. That’s the highest ever for a single quarter and up 15.8 percent from the first quarter of 2012, when the industry’s profits were $ 34.8 billion.

Record profits show banks have come a long way from the 2008 financial crisis. But the report offered a reminder that the industry is still struggling to help the broader economy recover from the Great Recession.

Only about half of U.S. banks reported improved earnings from a year earlier, the lowest proportion since 2009. That shows the industry’s growth is being driven by a narrower group of the nation’s largest banks.

Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money and record-low borrowing rates.

Bank lending declined from the October-December quarter, although that followed several quarters of increases.

And bank profits from interest charged fell 2.2 percent to $ 104 billion. The industry’s average interest income as a percentage of total loans on its books fell from 3.35 percent to 3.27 percent. That’s the lowest portion of total loans in nearly seven years.

That has forced banks to see more revenue from fees, despite complaints from customers and consumer advocates.

FDIC Chairman Martin Gruenberg said the banking industry “is in much stronger shape today than it was three years ago.” But he added that “it’s a fairly tricky environment for the industry” because of narrowing profit margins from charging interest and relatively weak demand for loans.

Income earned from interest on loans is falling in part because interest rates have been near record lows. The Federal Reserve’s aggressive stimulus programs since the crisis have exerted downward pressure on short- and long-term interest rates, making mortgages and other loans cheaper. The Fed’s low interest-rate policies are intended to boost borrowing and spending to accelerate overall economic growth.

Still, many banks have adopted stricter lending standards since the financial crisis, requiring higher credit scores, larger down payments and proof of employment. So while loans are a bargain, they are only available to those who can qualify.

Another sign of the industry’s health is that fewer banks are at risk of failure. The number of banks on the FDIC’s “problem” list fell to 612 from 651 as of Dec. 31.

And so far this year, only 13 banks have failed. That follows 51 closures last year, 92 in 2011 and 157 in 2010. The 2010 closures were the most in one year since the height of the savings and loan crisis in 1992.

On Tuesday, Moody’s Investors Service said it had raised its outlook for the U.S. banking industry from “Negative” to “Stable,” the first increase in five years. The rating agency said sustained economic growth and a better jobs picture will help banks over the next 12 to 18 months.

The FDIC is backed by the government, and its deposits are guaranteed up to $ 250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.

Associated Press

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US banks report record earnings of $40.3B for Q1