Last week, banking giant Citigroup Inc. (NYSE:C) announced that it was exiting the mortgage brokerage business, where many banks have been grappling with the fallout from the housing collapse. According to Citigroup, most of the 300 employees tied to the brokerage business will be reassigned. The company’s spokesman Mark Rodgers said that job “discontinuances” may be in the “low double digits”, and that Citigroup will now focus on its own retail and correspondent channels instead.
Stock Market News
Last Friday, shares of Ford Motor Company (NYSE:F), a global automotive industry leader, rose by 4.16%, after the release of better than expected unemployment figures, which showed that the unemployment rate has fallen to a three-year low of 8.3%. Given that more people working means greater consumer spending, Ford, together with the other US automobile makers, experienced big jumps in their stocks last Friday.
The iShares FTSE/Xinhua China 25 Index Fund (NYSE:FXI), the ETF of Chinese stocks, ended last week at $40.48, marking a 1.38% gain for the week. The index fund, which has been on an upward trajectory since last October, has gained 16.15% since the start of the year.
Struggling to maintain the year’s upward momentum, market malaise was finally broken on Friday with news that unemployment hit its lowest rate for two years. Large increases in non-farm and private payrolls help the rate fall to 8.3%, and the Dow Jones rise 157 points on the last trading day of the week, a net gain of 202 points, or 1.59% for the week. The S & P 500 Index burst through resistance at 1325 to finish the week at 1344.90, a gain of 2.2%, whilst last week’s star, the Nasdaq 100, continued to out perform with a gain of 2.7% to 2529.17.
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Last Friday, West Texas Intermediate crude closed at $99.76 per barrel while Brent crude oil closed at $111.58 per barrel, marking a small gain over the preceding week. At the beginning of the week, oil prices rose modestly after the European Union announced its decision to impose an embargo on Iran’s oil exports. The EU said the embargo would be implemented over the course of several months to avert a sharp hike in oil prices, although Iran subsequently indicated that it may stop supplying oil to Europe immediately.
This morning before the start of trading on the New York Stock Exchange and Nasdaq Amgen (NASDAQ: AMGN) announced that it was purchasing biotech company Micromet Incorporated (NASDAQ: MITI) for a blockbuster $1.16 billion acquisition.
Micromet announced that it also agreed to the buyout and shareholders will receive $11 in cash per every share that they own.
Market fights its way forward as economic indicators turn mixed
US markets ended mildly stronger for the second week running, though struggling to remain in the black as mixed economic figures and concerns over European debt tempered Alcoa’s strong release early in the week.
Last year, hedge funds delivered one of their worst annual performances in recent years. According the Hedge Fund Research (HFR), the average hedge fund fell by 4.8% last year. Mr Charles Gradante, co-founder of Hennessee Group LLC, a hedge-fund adviser, said, “It was a disappointing year for hedge funds as they underperformed broad market returns for the second year in a row.” (In 2011, the Dow Jones Industrial Average rose by 5.5% and the S&P 500 fell by 0.02%.)
After having led a surge in bank stocks last Thursday, shares of Bank of America (NYSE: BAC) fell by about 2% the following day to end at $6.17. This was after initial market speculations that the Obama administration would provide more financial assistance to distressed homeowners failed to materialize. An Obama administration official came out to deny that there were plans for a trillion-dollar program to refinance home loans.
The New Year kicked off on a firm footing after the holiday season. With European markets moving markedly higher in thin volume upon traders’ return after their own New Year break, the US market followed suit and posted gains approaching 2% on Tuesday. However, the market couldn’t continue its momentum through the rest of the week as disappointing economic data from Germany and the Eurozone overshadowed numbers showing a continued expansion of economic fortunes in the United States.