On Wednesday, US stocks increased as investors processed a fresh wave of quarterly earnings, while the debate over the timing of interest rate cuts continued in the background. The Dow Jones Industrial Average (^DJI) rose by 0.3%, with the S&P 500 (^GSPC) jumping nearly 0.5%. The Nasdaq Composite (^IXIC) also rose by more than 0.5%. The market assessed the performance in this earnings season, with around two-thirds of S&P 500 company reports now available. Results have, on average, exceeded Wall Street expectations, yet some areas of weakness have emerged. In morning trading on Wednesday, Alibaba (BABA) shares declined about 5% after the Chinese online retailer posted lower-than-expected revenue but announced plans to boost share buybacks by $25 billion. Upcoming on the earnings docket is Disney (DIS), which announced on Tuesday that its ESPN unit will collaborate with Warner Bros. Discovery (WBD) and Fox (FOXA) to launch a new sports streaming service. Also to come are appearances by four Federal Reserve officials, including the Boston Fed’s Susan Collins and Richmond Fed’s Tom Barkin. Investors are on the lookout for any indications of a policy change that could revive diminishing expectations for an early rate cut. Meanwhile, growing concerns at New York Community Bancorp (NYCB) have raised worries about regional banks and the health of the real estate sector. Moody’s has downgraded the lender’s credit rating to junk, and several brokerages have reduced their price target due to warnings about governance risk. NYCB shares fell by 8%, adding to a decline of more than 22% on Tuesday. Live2 updates
Wed, February 7, 2024 at 5:12 AM PSTNYCB attempts to reassure investors in late night press releaseAt 11:46 p.m. ET on Tuesday, New York Community Bank (NYCB) issued a release seeking to reassure investors that the 60% plunge in its stock price and a downgrade to some of its credit ratings from Moody’s on Tuesday overstate the challenges facing the bank. The lender’s shares were up as much as 15% in pre-market trade. “We took decisive actions to fortify our balance sheet and strengthen our risk management processes during the fourth quarter,” NYCB CEO Thomas Cangemi said in the statement. “Our actions are an investment in enhancing a risk management framework commensurate with the size and complexity of our bank and providing a solid foundation going forward. Despite the Moody’s ratings downgrade, our deposit ratings from Moody’s, Fitch and DBRS remain investment grade. The Moody’s downgrade is not expected to have a material impact on our contractual arrangements.” As Yahoo Finance’s David Hollerith outlined early Wednesday, the challenges at NYCB are in part an echo from last year’s regional bank crisis, which saw the firm take on some assets of failed lender Signature Bank. This, in turn, bumped NYCB up a tier in terms of its asset base, subjecting it to additional oversight and liquidity requirements. The departure of two key executives has also heightened scrutiny on the bank. After Fed Chair Jerome Powell told “60 Minutes” this weekend that pressures in the commercial real estate market could lead to additional bank closures, the action in the stock market suggests investors see NYCB as being particularly at risk.
