The broad indices all pulled back slightly, as investors seemed to be digesting last week's flurry of economic news. Investors cheered the announcement of the Federal Open Market Committee last Wednesday that Federal Reserve monetary stimulus policy would remain unchanged, at least until the next FOMC meeting in September.
Then on Friday, the Bureau of Labor Statistics reported nonfarm employment in the U.S. increased by 162,000 jobs during July, with the national unemployment rate falling to 7.4% from 7.6% in June. The number of jobs added during July came in below the consensus estimate of 185,000, among economists surveyed by Thomson Reuters.
The Institute for Supply Management on Monday said its nonmanufacturing index rose to 56% in July from 52.2% in June, with 16 service industries reporting growth, while only two -- Mining and Health Care & Social Assistance -- reported declining activity.UBS economist Maury Harris in a note to clients on Monday wrote "Payroll gains have averaged 192,000 per month so far this year, up from 183,000 in all of 2012. This pace is more than enough to keep lowering the unemployment rate." "We continue to expect that the unemployment rate will fall to 7.0% by year end as employment gains remain healthy, albeit moderate," Harris added. The KBW Bank Index (I:BKX) was down slightly to close at 66.71, with all but five of the index components showing declines. The index has returned 30% this year, following a return of 30% during 2012. In the midst of such a strong rally for U.S. bank stocks, investors are having a more difficult time finding bargains. "The large-cap U.S. banks that had been languishing below tangible book value since early 2011 [Citigroup (C), Morgan Stanley (MS) and Bank of America (BAC)], all had regained that level by last week," according to KBW analyst Frederick Cannon, who in a note on Sunday suggested investors look to Europe for big-bank stock bargains. Leaving aside price-to-book ratios and looking further out than usual, TheStreet on Monday identified the five U.S. bank stocks trading cheapest to consensus 2015 earnings estimates. The list is diverse, including large and small banks with differing business models.
HSBCHSBC on Monday reported first-half profit attributable to the parent company of $10.284 billion, or 54 cents a share, increasing from $8.438 billion or 29 cents a share, during the first half of 2012. Profit before tax for the first half was $14.071 billion, increasing 10% from $12.737 billion a year earlier.
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