Banks lead stocks lower after the Fed caps their dividends
Stocks are opening lower on Wall Street, led by declines in banks after regulators told them they had to cap their dividends and halt stock buybacks in order to shore up their defenses in case the recession gets worse. The S&P 500 fell 0.5% in early trading Friday. Nike also fell after reporting a big loss as most of its stores were forced to close. Investors were disappointed to see that the number of confirmed new coronavirus cases per day in the U.S. hit an all-time high of 40,000, surpassing the peak set during one of the deadliest stretches in late April.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Global stock markets rose Friday after U.S. regulators removed some limits on banks' ability to make investments.
London and Frankfurt opened higher, while Tokyo, Seoul and Sydney also rose. Hong Kong declined. Chinese markets were closed for a holiday.
Markets regained momentum after the Federal Reserve and other regulators announced they will ease rules that limit banks' ability to invest in hedge funds and some other areas. The change could help to boost bank profits after central banks cut interest rates to almost zero in response to the coronavirus pandemic.
Gains were relatively small because Washington delivered no more than was expected, Stephen Innes of AxiTrader Corp. said in a report. He said markets gave a similar “mild reaction” to the Bank of England's earlier decision to ease bank policy.
“Investors are finding it hard to see the marginal or incremental new support,” said Innes. “Investors may need more prominent catalysts. Ideally a vaccine.”
In Europe, the FTSE 100 in London rose 1.7% to 6,250 and Frankfurt's DAX added 1.1% to 12,316. The CAC 40 in France was 1.7% higher at 5,001.
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