The Joplin Globe, Joplin, MO

Business

March 27, 2014

Tech stocks, Citigroup drag hold back stock market

NEW YORK — U.S. stock indexes are little changed in early trading Thursday as positive economic reports were offset by more declines in technology companies.

Banks were also in focus after the Federal Reserve denied Citigroup’s proposal to raise its dividend and buy back more stock. The Fed approved plans by other banks to raise their dividends. Citigroup plunged 5 percent and Wells Fargo rose 2 percent.  GameStop fell after reporting weak results.

KEEPING SCORE: The Standard & Poor’s 500 index was down a point at 1,851 in the first 45 minutes of trading. The Dow Jones industrial average slipped two points to 16,268. The technology-heavy Nasdaq composite fell two points to 4,171.

REJECTED: Citigroup dropped $2.63, or 5 percent, to $47.58 after the Federal Reserve rejected the bank’s capital plan Wednesday night. The Fed’s action stops the bank from raising its dividend or buying back more of its own stock. It was the second time in three years that Citi’s plans for returning money to its shareholders were denied. The bank brought in CEO Michael Corbat in 2012, the last time the Fed rejected Citigroup’s capital plan, with the mandate of speeding up the bank’s turnaround.

OTHER BANKS: Citigroup was one of only two banks who had their capital plan rejected. Other banks, such as JPMorgan Chase, Wells Fargo and Bank of America, rose after the Federal Reserve approved those banks’ plans to increase their dividends and buy back additional shares.

ECONOMY WATCH: The government estimated that the U.S. economy expanded at a 2.6 percent pace between October and December, slightly better than previously thought, as consumer spending rose at the fastest pace in three years. In a separate report, the government also said the number of people seeking U.S. unemployment benefits fell 10,000 last week to 311,000, the lowest since late November. Both reports were better than economists were expecting.

TECH STRUGGLES: A sell-off in technology stocks continued for a second day Thursday. Facebook fell $1.40, or 2 percent, to $58.96, on top of its 7 percent drop Wednesday. Investors questioned Facebook’s purchase of virtual reality company Oculus earlier this week for $2 billion. Google fell $21.60, or 2 percent, to $1,110.91. Investors also continued to hammer King Entertainment, the producer of the “Candy Crush Saga” video game, a day after its stock market debut. The stock dropped 71 cents, or 4 percent, to $18.29. It plunged 16 percent the day before.

OTHER MARKETS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.70 percent from 2.69 percent late Wednesday. The price of crude oil rose $1.09, or 1.1 percent, to $101.35 a barrel.

 

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