FBR analyst Paul Miller has a "market perform" rating on Zions, and on Tuesday maintained his $28 price target but cut his 2014 EPS estimate for the company to $2.00 from $2.05. "The company experienced weaker loan growth this quarter than it had for the past six quarters as loan balances were flat almost across the board," Miller wrote in a note to clients. Zions' management indicated Monday that C&I loan growth might resume during the fourth quarter because of an increase in unfunded loan commitments. "If there is continued economic uncertainty, however, loan growth will likely remain lackluster, which would impede earnings growth," Miller wrote.
Employment Numbers and Federal Reserve Policy
The broad indices all ended higher, after the Department of Labor released its employment report for September, which was delayed two weeks by the partial shutdown of the federal government that ended last Thursday. The Labor Department on Tuesday said the U.S. economy added 148,000 nonfarm jobs during September and that the national unemployment rate improved to 7.2% during September from 7.3% in August. Economists polled by Reuters had, on average, expected September payrolls to grow by 180,000, with the unemployment rate remaining at 7.3%. The Labor Department said, "The employment change for July was revised down by 15,000 (from +104,000 to +89,000), and the employment change for August was revised up by 24,000 (from +169,000 to +193,000)." Average monthly employment growth for the past 12 months was 185,000. The relative weakness in the September employment numbers may well reinforce investors' expectations that the Federal Open Market Committee (FOMC) will once again decide to stand pat with "QE3" stimulus policy for the Federal Reserve. The Fed has been making monthly purchases of $85 billion in long-term securities since September 2012 in an effort to hold down long-term interest rates. Investors had long expected the FOMC to "taper" the central bank's bond purchases, leading up to the committee's last meeting on Sept. 17 and 18, and the market rate on 10-year U.S. Treasury bonds had risen by nearly 100 basis points from the end of April until that meeting.