The broad indices all ended lower, after the Department of Commerce said October retail sales rose 0.4% from September and were up 3.9% from October 2012. This was the largest sequential increase in consumer spending in four months. The consensus among economists polled by Thomson Reuters was for consumer spending during October to be unchanged from September.
A sharp decline in gasoline prices helped push the U.S. Consumer Price Index down for the first time in six months. The Bureau of Labor Statistics said the October CPI was down 0.1% from September, although it was up 1% from October 2012. "The gasoline index fell 2.9 percent in October and led to the seasonally adjusted decline in the all items index," The Bureau of Labor Statistics said in its press release, while "Other energy indexes were mixed, with the electricity index rising, but the indexes for fuel oil and for natural gas declining."
Economists had expected no change in the October CPI from September.
Lower fuel and oil prices during October were especially timely, and could bode well for holiday sales in November and December.
The negative reaction to a decent set of economic numbers in the broad market reflects continued uncertainty over the timing of the expected tapering of Federal Reserve bond purchases. The central bank has been making net monthly purchases of long-term U.S Treasury bonds and agency mortgage-backed securities since September 2012. The Federal Open Market Committee's next meeting will take place Dec. 17-18, but most economists expect no change this year in the Fed's "QE3" stimulus policy.
Sterne Agee chief economist Lindsey Piegza in a note to clients on Wednesday echoed this view, writing that "This morning's report coupled with Chairman Bernanke's comments last night regarding the disappointing nature of the latest employment reports, all but assures that tapering is now a 2014 (or beyond) event."
Bank stocks fared better than the broad market on Wednesday, with the KBW Bank Index (I:BKX) falling slightly to close at 66.29.
The biggest sector news on Wednesday was the continued reaction to the landmark $13 billion mortgage settlement between JPMorgan Chase (JPM), the Department of Justice, federal regulators and states' attorneys general.
JPMorgan's shares pulled back slightly % to close at $56.03.
Please see TheStreet's extensive coverage for what the largest regulatory settlement in U.S. history means for JPMorgan, for distressed homeowners, for New York attorney general Eric Schneiderman and for investors:
- Settlement Unshackles JPMorgan's Stock
- JPMorgan's 'Admission' Oversold by Government
- NY AG Gathers 11 Raves for JPMorgan Role
- $4B in JPMorgan Consumer Relief Will Rankle Investors
- What JPMorgan's $13 Billion Settlement Means
Bank of New York Mellon
Shares of Bank of New York Mellon have returned 31% this year. The shares trade for 2.5 times their reported Sept. 30 tangible book value of $13.36, and for 13.3 times the consensus 2014 earnings estimate of $2.50 a share, among analysts polled by Thomson Reuters. The consensus 2015 EPS estimate is $2.79.
Based on a quarterly payout of 15 cents, the shares have a dividend yield of 1.80%.
The company's return on average tangible common equity for the first three quarters of 2013 was 15.12%, declining from 18.12% for all of 2012 and 22.58% in 2011, according to Thomson Reuters Bank Insight.
Please see TheStreet's detailed earnings coverage for more information on Bank of New York Mellon's performance.