Oct 12 - Summary of business headlines: Stocks drop big for the week, but flat for the day; U.S. consumer sentiment hits five-year high; JPMorgan Chase, Wells Fargo sink despite record profits; Apple may debut iPad mini on October 23 –source. Conway G. Gittens reports.
Wall Street was caught between feeling good about the consumer and feeling nervous about the banks. The tug-of-war ended with the market ending pretty close to where it started. That means stocks closed the books on their worst week since June. Let's start first with the consumer. The mood of the American shopper took a leap in October - hitting a five-year high. The Thomson Reuters/University of Michigan preliminary reading on consumer sentiment - coming in at an unexpected 83.1. The bounce comes in wake of improving employment numbers and a housing market on the mend. That housing market is giving Wall Street coffers a boost. JPMorgan Chase posted record profits last quarter thanks to a boom in its mortgage business. It was a similar story at smaller rival Wells Fargo. Paul Miller follows the banks at FBR Capital Markets. SOUNDBITE: PAUL MILLER, MANAGING DIRECTOR, FBR CAPITAL MARKETS (ENGLISH) SAYING: "The 10-year yield is so low and that's what mortgage rates are based on. There's such a huge spread. You originate a mortgage and originating that mortgage and then selling it, they are making 4 or 5 dollars per 100 dollars on those mortgages, which is giving them a lot of flexibility and earnings going through the quarter." But revenues at Wells Fargo did not live up to expectations, causing concern bank stocks have run up too far ahead of the fundamentals. Shares of Wells Fargo lost 2.6 percent, while JPMorgan Chase was down 1.1 percent. Apple may be ready to take the wraps off a much speculated iPad mini. Sources say an event is being planned for October 23rd, but did not specify if a product will be announced. And for its part, Apple would not comment. If true, the unveiling would come just days ahead of a Microsoft debut of Windows 8 and its new surface tablet. Numbers in from Washington: the U.S. federal deficit topped $1 trillion for the fourth fiscal year in a row. Action in Europe was downbeat - stocks slipped less than a full percent. Conway Gittens, Reuters