Mixed economic reports, including strong earnings from Goldman Sachs, the job market and leading indicators had the net effect of sending stocks and exchange traded funds (ETFs) firmly negative.
The markets were losing steam this morning as President Barack Obama proposed tougher regulations for big banks. The new rules would impose restrictions on proprietary trading by commercial banks to separate those institutions from investment banks, says the Associated Press. Building on his own proposals and the work of the House of Representatives, Obama wants new federal government powers to limit the size and complexity of large financial institutions. [Financial ETFs: Still struggling, but improving.]
Goldman Sachs Group (NYSE: GS) reported earnings of $4.79 billion in the fourth quarter as the bank cut back on compensation and its trading business again outpaced the rest of the financial industry. According to the Associated Press, the company rewarded its employees with $16.2 billion in salaries and bonuses for 2009, because in 2008, Goldman set aside 48% of its revenue to pay employees. Financial Select Sector SPDR (NYSEArca: XLF) is down nearly 3% this morning.
Leading economic indicators are up, signaling increased economic activity up 1.1%. The increase in the Conference Board’s index of leading economic indicators was larger than the 0.7% rise that economists surveyed by Thomson Reuters had expected. Tali Arbel for Associated Press says that analysts are still wary that the economy could stagnate as the government winds down programs.
Amy Rolph for Herald Net reports that the layoffs are slowing down, however, unemployment keeps rising. Officials are speculating that part of the uptick in jobless numbers could be caused by discouraged workers starting job searches again.
Meanwhile, crude futures slipped to a one-month low as fuel demand waned. Brain Baskin for The Wall Street Journal reports that oil is trading just below $77 a barrel. Refineries operated at 78.4% of capacity last week, their lowest rate in at least two decades outside the immediate aftermath of a hurricane. United States Oil (NYSEArca: USO) is down 3.5% year-to-date. For more stories about oil, read our oil category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.