Category: Stock Market News

The Securities and Exchange Commission settled charges with Morgan Stanley Smith Barney on Tuesday, fining the firm $8 million for selling unsuitable ETF products to customers and not obtaining proof the clients understood the risks involved with purchasing inverse ETFs. Morgan Stanley admitted its wrongdoing. Those clients did not sign disclosure notices that explained that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy. Many of the clients who purchased single inverse ETFs to be held long-term in retirement and other accounts experienced losses. Morgan Stanley also failed to conduct risk reviews to evaluate the suitability of inverse ETFs for each advisory client and did not ensure that certain financial advisers completed training on the product and its risks.

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WASHINGTON (MarketWatch) – Russia has deployed a cruise missile that American officials say violates a 1987 arms-control treaty, potentially complicating relations with a Trump White House that had planned to seek more common ground, according to the New York Times. The Obama administration objected to the missile and had asked Russia to make it compliant with 1987 ban on intermediate ground-launched weapons. Yet Russia apparently has gone ahead and deployed a number of these new missiles that U.S. officials call a SSC-8. The Pentagon is considering options to counter the missile and shield NATO allies within its range, the Times said.

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WASHINGTON (MarketWatch) — The White House will reopen for public tours, first lady Melania Trump said Tuesday. It will reopen on March 7. Members of Congress — who can arrange visits for their constituents — have voiced displeasure over the unavailability of such tours.

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Exchange-traded funds that track the financial sector jumped on Tuesday, after Federal Reserve Chairwoman Janet Yellen offered an upbeat outlook for the U.S. economy and suggested that interest rates could be raised at “upcoming meetings.” Some took the comments as implying that the Federal Open Market Committee could raise key interest rates as early as the Fed’s next policy meeting in March. Higher rates are seen as a tailwind for the sector, in large part because of bank net interest margin, or the difference between the interest they earn on the loans they make and the interest they pay out. Low rates can depress net interest margins, which can lead to lower earnings. The Financial Select Sector SPDR ETF rose 0.8% and was by far the biggest gainer among S&P 500 sectors. The SPDR S&P Bank ETF added 1.2% while the SPDR S&P Regional Banking ETF advanced 1.3%.

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Shares of Under Armour Inc. tacked on 0.4% in morning trade Tuesday, after the athletic apparel and accessories company was upgraded at Morgan Stanley, which citing a more balanced risk-versus-reward scenario following the plunge in the stock price over the past year. Analyst Jay Sole raised his rating to equal weight, after being at underweight for teh past 13 months, but he cut his stock price target to $20, which is below current levels, from $25. The stock has tumbled 46% over the past 12 months, while the S&P 500 has climbed 25%. Sole said among some of the investor concerns are whether the Under Armour brand is broken and how well the company can control costs. “Visibility is still relatively low, but we think answers [will] begin to emerge over the next six months,” Sole wrote in a note to clients. “The stock now discounts more reasonable long-term assumptions, in our view, even though in the near term this means an elevated multiple.”

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Treasury yields jumped on Tuesday after Federal Reserve Chairwoman Janet Yellen left the door open to an interest-rate increase at the central bank’s coming March policy meeting. The yield on the 10-year Treasury note rose 4.5 basis points to 2.481%, while the yield on the two-year note — typically the most sensitive to rate-hike expectations — rose 3.7 basis points to 1.246%. The yield on the 30-year Treasury bond rose 3.5 basis points to 3.067%. Yellen said that Fed officials will consider raising interest rates “at our upcoming meetings,” a decidedly more hawkish message than the central bank’s latest policy outlook, which cautioned that the central bank would be careful to raise interest rates gradually. Yellen added that waiting too long to raise interest rates would be “unwise” because it could force the central bank to play catch-up.

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Gold futures edged higher Tuesday, but traded well off the session’s highs as traders weighed prepared remarks from Federal Reserve Chairwoman Janet Yellen, as well as comments from Richmond Fed President Jeffrey Lacker. In prepared remarks ahead of her testimony to Congress, Yellen said interest-rate hikes can be gradual but the central bank will look to incoming economic data to see if an adjustment to the federal funds rate would be appropriate. Separately, Lacker said that “significantly higher rates are warranted.” April gold rose $2.10, or 0.2%, to trade at $1,227.90 an ounce, below the intraday high of $1,236.

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Rising commercial real estate prices may leave some small banks vulnerable to a drop in the market, the Federal Reserve said Tuesday. In a report to Congress on financial stability, which accompanied Fed Chairwoman Janet Yellen’s testimony to the Senate Banking Committee, the central bank said that commercial real estate prices, which have been an area of growing concern at the central bank, rose further. Overall financial vulnerabilities in the U.S. financial system overall have continued to be moderate since mid-2016, the Fed said. Valuation pressure in some asset classes have been rising, particularly late last year, the report said. Outstanding riskier corporate debt edged down over the past year, but issuance of leveraged loans was strong.

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U.S. stocks opened slightly lower on Tuesday as investors awaited comments from Federal Reserve Chairwoman Janet Yellen. The main three benchmarks retreated after touching the latest in a series of record highs on Monday, with the S&P 500 index down two points, or 0.1%, to 2,326. The Dow Jones Industrial Average fell 34 points, or 0.2%, to 20,381. The Nasdaq Composite Index shed eight points, or 0.1%, to 5,756. T-Mobile U.S. Inc. shares rose after the company reported strong fourth-quarter earnings. U.S.-listed shares of Credit Suisse Group AG rose after the Swiss lender posted a wider-than-expected loss on litigation costs and said it would cut 5,500 jobs this year. Shares of General Motors Co. rallied after the PSA Group, owner of French car maker Peugeot, said it is in talks to buy GM’s Opel brand. Shares of toy maker Mattel Inc. rose after it said it will team up with Alibaba to develop and sell new products for Chinese consumers.

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Shares of Cynosure Inc. soared 28% in active premarket trade Tuesday, after the medical aesthetics systems and technologies company announced a deal to be acquired by Hologic Inc. in a deal valued at $1.65 billion. With volume of 5.7 million shares, Cynosure’s stock was the most active ahead of the open. Under terms of the deal, Hologic will pay $66 a share in cash for each Cynosure share outstanding, which represents a 28% premium to Monday’s closing price of $51.50. Hologic said it expects the deal to reduce net earnings, but add 3 cents a share to 5 cents a share to adjusted earnings in fiscal 2017. Syngergies aer expected to be $25 million by the third year after the deal closes. Cynosure develops products used by plastic surgeons for noninvasive body contouring, hair removal and skin revitalization. Hologic’s stock slumped 5.1% ahead of the open. Cynosure’s stock has run up 47% over the past 12 months through Monday, while Hologic shares have climbed 23% and the S&P 500 has rallied 25%.

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