Month: September 2015

U.S. stocks closed moderately higher on Monday, but a selloff in health-care stocks capped gains in the main indexes. Biotech stocks got hit after presidential candidate Hillary Clinton said she would lay out a plan to prevent price gouging by drugmakers. The S&P 500 closed 8.94 points, or 0.5%, higher at 1,966.97. The Dow Jones Industrial Average added 125.61 points, or 0.8%, to 16,510.19. The Nasdaq Composite ended the day 1.73 points higher, or less than 0.1%, at 4,828.95.

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The number of first mortgages extended to subprime borrowers was up 30.5% in the first five months of 2015, according to data from consumer-credit agency Equifax . At the same time, the number of home equity loans to subprime borrowers climbed 29.5%, while home equity lines of credit to subprime borrowers was up 20.4%. Subprime borrowers are generally defined as those with a credit score below 620. Still, the segment remains just a fraction of overall mortgage originations, said Equifax, and is far below the pace of subprime lending that was being extended prior to the Great Recession. “The data make it very clear that almost nobody is getting home equity lines of credit if they don’t have a credit score above 620,” said Amy Crews Cutts, Equifax chief economist. “But we are seeing a rise in first mortgage and home equity installment loan origination subprime shares. It appears that American lenders still believe in second chances, and without subprime loans, there would be no second chances in the housing market.” Still, Equifax said lenders have clearly taken steps to reduce risk. In 2008, more than 10% of first mortgage originations went to subprime borrowers, compared with about 4.6% in 2015.

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Apple Inc. released the first major software update for Apple Watch on Monday, after postponing the launch last week due to system bugs. WatchOS2, which was supposed to hit alongside Apple’s new iOS 9 mobile operating system on Wednesday, launches with a suite of native apps designed specifically for the watch, such as a health app called Airstrip that lets doctors keep tabs on patient vitals from afar. Shares of Apple climbed 1.6% to $115.27 in recent trade. They are down about 9% over the last three months, versus an 8.3% decline for the broader Dow Jones Industrial Average.

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Samsung Electronics told MarketWatch it “continuously evaluates trends and assess business growth opportunities” in reference to whether it is planning an installment payment plan for its smartphones similar to the one Apple Inc. recently announced for its iPhones. That comes in response to a Forbes article published this morning, citing unnamed sources, which said the South Korean electronics giant is planning to launch a leasing program for its Galaxy brand within the next few months. Carriers have been moving away from two-year contracts and towards installment plans, where users take on greater responsibility for the full price of the phone. Officially, a company spokesperson said Samsung would “not comment on rumor or speculation.” Shares of Samsung closed down 3.4% in South Korea on Monday. They are down 9% over the last three months.

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Health-care stocks were getting whacked in afternoon trade Monday after Democratic presidential candidate Hillary Clinton said in a tweet that she planned to reveal a plan to curb price increase by drugmakers. The health-care sector, down nearly 2%, is the only sector among the S&P 500’s 10 that is trading sharply lower. Another gauge of tech performance, the iShares Nasdaq Biotechnology ETF also turned negative. The decline in health care is proving a drag on stocks, which pared gains after Clinton’s comments. U.S. stocks are attempting to snap a two-session losing streak after the Federal Reserve left interest rates unchanged Thursday.

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Atlanta Fed President Dennis Lockhart on Monday said he’s confident there will be a rate hike this year. “As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. I am confident the much-used phrase ‘later this year’ is still operative,” said Lockhart, a voting Federal Open Market Committee member.

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Shares of Pandora Media Inc. soared more than 6% Monday after a positive ruling from the Copyright Office on royalty rates. “We are pleased that the Copyright Office affirmed the admissibility of Pandora’s agreement with Merlin as a valid benchmark in the Copyright Royalty Board proceedings,” said Dave Grimaldi, Pandora spokesman. This sets the stage for a potentially positive ruling, expected mid-December, that will determine the rates and terms for webcasting under a statutory license for a five-year term starting on Jan. 1. Pandora partnered with Merlin, which represents independent record labels, in 2014, allowing it for the first time to negotiate rates directly with record labels.

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Shares of Tesla Motors Inc. rose 3% on Monday as the electric-car maker sent out invitations for the official launch of its Model X. The SUV will roll out the Fremont, Calif., assembly line on Sept. 29 as Tesla’s Chief Executive Elon Musk previously disclosed. An event is set for 7 p.m. that day. The invitation had no other details and showed a shadowed Model X with its distinctive falcon-wing doors up. The car is the third Tesla vehicle to be sold, after the discontinued Roadster and the current Model S sedan.The Model X is thought to appeal particularly to women and families with children and its launch has been slightly delayed. Tesla has promised a third car, the mass-market Model 3, in the next two years. Musk has said the company will start taking Model 3 orders in March 2016. The Model 3 is expected to cost $35,000. A fully loaded Model X sells for $132,000 without upgrades, while a base Model S starts at $75,000.

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WASHINGTON (MarketWatch) — Presidential candidate Hillary Clinton on Monday says she’ll lay out a plan to prevent gouging by drugmakers, following an article in The New York Times about a drug whose price was raised to $750 a tablet from $13.50. “Price gouging like this in the specialty drug market is outrageous. Tomorrow I’ll lay out a plan to take it on,” Clinton tweeted. The iShares Nasdaq Biotechnology ETF exchange-traded funded fell nearly 4%.

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Google Inc.’s stock target was raised to $847 from $720 at JMP on Monday ahead of the implementation of a planned restructuring under Google’s newly-formed parent company Alphabet. Analyst Ronald Josey, who reiterated a market outperform rating on the stock, said that under the new company structure, core Google, which includes YouTube, search and its ads business, will be “significantly more profitable” than the parent company as a whole, with operating margins in the 47% to 53% range. The value of the core Google business would trigger a “re-rating of shares higher” after the transition, said Josey. Alphabet’s other businesses, which include its experimental X Lab, will likely continue to operate at a loss, but could drive “significant strategic value” for Alphabet over time, the analyst said. Shares of Google were up 0.7% to $665.26 in recent trade. They have risen more than 19% over the last three months, outperforming the broader S&P 500, down 6.5%.

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