While you were sleeping: Citigroup drops

Article – BusinessDesk

March 28 (BusinessDesk) Wall Street fell along with shares of Citigroup after the bank failed a Federal Reserve stress test of its capital plan, overshadowing an upward revision of US economic growth in the fourth quarter of 2013.

While you were sleeping: Citigroup drops

March 28 (BusinessDesk) – Wall Street fell along with shares of Citigroup after the bank failed a Federal Reserve stress test of its capital plan, overshadowing an upward revision of US economic growth in the fourth quarter of 2013.

Shares of Citigroup fell, down 5.5 percent, after the bank’s capital plan failed the latest Fed stress tests of the nation’s top 25 banks. A source close to the matter told Reuters that Citi officials had not expected the rejection.

“Needless to say, we are deeply disappointed by the Fed’s decision regarding the additional capital actions we requested,” Michael Corbat, Citi’s chief executive officer, said in a statement. “The additional capital actions represented a modest level of capital return and still allowed Citi to exceed the required threshold on a quantitative basis.

“We will continue to work closely with the Fed to better understand their concerns so that we can bring our capital planning process in line with their expectations and meet their standards on a qualitative basis as well. We have not yet made a decision as to when we will resubmit our plan,” Corbat said.

Four other banks failed the test as well.

“Things are improving and the banking industry has turned a corner; it just might not be as far along as the market would like,” Joseph Vitale, a partner at law firm Schulte Roth & Zabel who represents financial firms, told Bloomberg News. “You’ve still got some time to go before the regulators see things as business-as-usual again.”

In afternoon trading in New York, the Dow Jones Industrial Average slid 0.11 percent, the Standard & Poor’s 500 Index fell 0.26 percent, while the Nasdaq Composite Index declined 0.54 percent.

Shares of IBM and Cisco fell, down 1.6 percent and 1.4 percent respectively, and led the Dow lower.

Meanwhile the latest economic reports helped brighten the outlook for the US. Gross domestic product expanded at a 2.6 percent annualised rate from October through December, which was better than the 2.4 percent gain reported last month, according to Commerce Department data. To be sure, the revised number fell short of expectations.

Separately, initial claims for state unemployment benefits unexpectedly fell, declining 10,000 to a seasonally adjusted 311,000 last week, according to Labor Department data.

“The economy looks in a better place than it did just 24 hours ago,” Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi UFJ in New York, told Reuters.

The National Association of Realtors’ pending home sales index fell 0.8 percent in February to its lowest level since October 2011. But the outlook has improved.

“Contract signings for the past three months have been little changed, implying the market appears to be stabilising,” Lawrence Yun, NAR chief economist, said in a statement. “Moreover, buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather delayed transactions should close in the spring.”

In Europe, the Stoxx 600 Index eked out a 0.1 percent gain from the previous close. Germany’s DAX also closed higher, finishing the day at 9,451.21. France’s CAC 40 fell 0.1 percent, the UK’s FTSE 100 slid 0.3 percent.

West Texas Intermediate crude climbed as much as 1.4 percent amid concern about a decline of supplies at Cushing, Oklahoma.

“The continuing depletion of supplies at Cushing is on everyone’s mind,” John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, told Bloomberg News. “We’re seeing the WTI-Brent spread come in as a result. There’s speculation that Cushing supplies could get below operational rates.”

(BusinessDesk)

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