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Stocks - Banks Drag Wall Street Lower After Fed Buyback Ban; Dow Down 290

Stock MarketsJun 26, 2020 09:43AM ET
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© Reuters.

 By Geoffrey Smith 

Investing.com -- U.S. stock markets opened lower on Friday and were on course to end the week down, after a rise in new Covid-19 cases and a blast from the Federal Reserve reminded investors of the obstacles to a quick recovery.

The Fed had announced the results of its annual stress tests late on Thursday and had ordered banks not to buy back stock in the third quarter and capped their dividend payouts, aiming to ensure that they strong enough to absorb up to $700 billion in loan losses as a result of the pandemic.

As such, bank shares led the two old-economy indexes lower on Friday. Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) stock all fell by between 4% and 5%.

By 10 AM ET (1400 GMT), the Dow Jones Industrial Average was down 291 points, or 1.1% at 25,454 points. The S&P 500 was down 0.8% while the Nasdaq Composite – unburdened by large-cap banks – was also down 0.8%.

The day's biggest gainer was Gap (NYSE:GPS), which soared 33% after announcing a "multi-year" partnership with rapper Kanye West to sell a Yeezy line of clothing, offering items such as hoodies, basics, T-shirts and joggers The new line is expected to appear in Gap stores and on Gap.com in 2021, the two parties said. West will keep sole ownership of the Yeezy brand.

After losing over 80% of its value since the start of the U.S.-China trade war in 2018, Gap stock has now nearly doubled from its March low, on hopes that it may escape the general apocalypse engulfing Main Street retail.

Earlier, the market was left cold by numbers showing that personal spending rebounded by a record 8.2% in May - albeit that was short of expectations of a 9% increase after the equally-record-breaking 12% drop in April. The rise is unlikely to be sustained due to the continuing high level of unemployment: jobless claims only just dipped below 20 million two weeks ago, according to data released on Thursday by the Labor Department.

Elsewhere, Tesla (NASDAQ:TSLA) stock fell 0.4% amid reports that the company had terminated two employees for failing to return to work as its Fremont factory reopened, even though it had previously given them leave to remain at home. Tesla was reported as saying it couldn't contact the employees in question.

In other markets,Crude Oil futures and Gold Futures both drifted on profit-taking after big run ups in the last week as the week's news flow slowed to a trickle.

 

Stocks - Banks Drag Wall Street Lower After Fed Buyback Ban; Dow Down 290
 

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Comments (19)
Dilip Kumar Pramanik
Dilip Kumar Pramanik Jun 26, 2020 1:10PM ET
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it has become intraday play only. no holding overnights
Zachary Buszta
Zachary Buszta Jun 26, 2020 12:51PM ET
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June has not been kind to the Dow this year, and I expect that July will be a better month for the Dow.
el karl
el karl Jun 26, 2020 11:53AM ET
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thank you powell so i can buy the dip, hahahahaha
Mike Roland
Mike Roland Jun 26, 2020 11:02AM ET
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GABOT Get America Back On Track by Voting out trumpy
Luke Aye
Luke Aye Jun 26, 2020 11:00AM ET
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Businesses are allergic to Powell.
Zhikang Sim
Zhikang Sim Jun 26, 2020 10:58AM ET
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go home powell
Thiago Detoni
Thiago Detoni Jun 26, 2020 10:56AM ET
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They know what they do. The game goes on.
Luke Aye
Luke Aye Jun 26, 2020 10:54AM ET
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Looks like Powell is determined to kick Trump out of office!
FED TrumpTweet Pillow
FED TrumpTweet Pillow Jun 26, 2020 10:39AM ET
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solution is for FED to buy everything, like bank of japan, why arent they doing it already? they must buy all the debt
Carlos Sousa
Carlos Sousa Jun 26, 2020 10:39AM ET
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Bears, need to buy equity...
FoyFoy Chairak
FoyFoy Chairak Jun 26, 2020 10:39AM ET
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Theyre doing just that atm
Bulls MakeMore
Bulls MakeMore Jun 26, 2020 10:27AM ET
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There's still too much cash on tje sidelines, and too much worry for this to be a bubble. Continuing Fed stimulus, virus receding except for 4 states that account for only 16% of GDP, continually improving economic numbers...no wonder we're in a new bull market...don't let the haters' words fool you, look at where people are actually putting their hard-earned money!
Jeremy Williams
Jeremy Williams Jun 26, 2020 10:27AM ET
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There is so much money on the sidelines because no saine person would buy in this overvalued market.
Joe Star
Joe Star Jun 26, 2020 10:27AM ET
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The market has been over valued since the 90's
Matt Kay
Matt Kay Jun 26, 2020 10:27AM ET
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Stock buybacks should be illegal like before Reagan.
Alfred Teo
Alfred Teo Jun 26, 2020 10:27AM ET
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Instead of keeping a strong cash reserve for the company to weather bad times, employ more and keep jobs, using it for stock buyback.....really speechless.
Joe Star
Joe Star Jun 26, 2020 10:27AM ET
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Alfred Teo Al. iTs called rewarding shareholders
el karl
el karl Jun 26, 2020 10:24AM ET
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The solution is.......buy on dip! hahahahaha
rr bonne
rr bonne Jun 26, 2020 10:24AM ET
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maybe sometimes
mohammed mebrouk
mohammed mebrouk Jun 26, 2020 10:24AM ET
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just the beginning of next week crash
Joe Star
Joe Star Jun 26, 2020 10:24AM ET
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As if you know anything. lol
Paul Browning
Paul Browning Jun 26, 2020 10:24AM ET
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Technically, the market is pretty much set up for a crash. To everyone who thinks stocks have the fundamentals to stay at this level, ask yourself what earnings on a forward looking basis will be. We're already in a recession and the country is being led by a maniacal fool with incompetent yes men as advisors.
James Dorward
James Dorward Jun 26, 2020 10:23AM ET
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Stock market is so.under valued it's amazing. Real Estate investing is sky high. Long Term investors in the market are gonna make out huge!! This market is so undervalued.
Croc Zilla
CrocZilla Jun 26, 2020 10:22AM ET
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Too little too late? Let's see, but I agree the Fed money shouldn't be used to inflate the bubble even more. It should be used to fund more investment in the real economy, to offset the current disquiet, and help people get back to gainful employment. That will ultimately generate a much stronger long-term recovery, and in turn a more sustained market recovery. Enough of Wall Street zombification. Let's see this cash land where it's most needed.
pankaj kumarjain
pankaj kumarjain Jun 26, 2020 10:11AM ET
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Donald Trump is a powerful man in this universe, bcoz of American people are powerful, lots of love from India, I request Mr Trump to save world from corona virus,
Freeload Twentytwenty
Freeload Twentytwenty Jun 26, 2020 10:10AM ET
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This loser Powell has to go .... Trump should have fired this geezer months ago.
Matthew Mover
Matthew Mover Jun 26, 2020 10:07AM ET
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He has always been against the market and the market knows, everytime he talks it tanks whether he says something good or bad. Fire him!
David Wang
David Wang Jun 26, 2020 9:53AM ET
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Feb Powell need to resign.
Matthew Mover
Matthew Mover Jun 26, 2020 9:53AM ET
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He has always been against the market and the market knows, everytime he talks it tanks whether he says something good or bad.
 
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