Oct. 11 - Summary of business headlines: U.S. stocks extend rally despite no debt deal; JP Morgan posts loss; Wells Fargo profit rises; Consumer sentiment hits nine-month low. Bobbi Rebell reports.
U.S. stocks added to Thursday's gains- on optimism a solution will soon be found- perhaps over the weekend- to resolve the government shutdown and the upcoming debt ceiling deadline on October 17th. The major indexes all closed higher on Friday, with energy stocks driving the S&P 500 higher after the Environmental Protection Agency proposed lowering the amount of ethanol blended into U.S. gasoline. For the week: it was a mixed bag, with the Nasdaq posting a loss. JPMorgan chief U.S. equity strategist Tom Lee: SOUNDBITE: TOM LEE, CHIEF U.S. EQUITY STRATEGIST, JPMORGAN CHASE (ENGLISH) SAYING: "I think there is a lot of fuel for a rally. One because the fundamentals are really improving; you know earnings, especially third quarter earnings are really showing an acceleration of profit growth but it's also about positioning. Hedge fund and mutual funds are as cautiously positioned as they were in August 2011 meaning if we get a deal they have to go back to risk on and that should help fuel a rally into year end." But with no deal done- consumer sentiment took a hit in early October. The Thomson Reuters/University of Michigan preliminary reading on consumer sentiment fell to 75.2 in October- its weakest level in nine months. Economists say the damage will intensify if the shutdown lasts more than two weeks. JPMorgan posted its first quarterly loss under Chairman & CEO Jamie Dimon. Its huge legal and regulatory mess cost the bank $7.2 billion. In fact the bank has set aside $23 billion for settlements, fines and other legal expenses. Wells Fargo posted a better-than-expected profit in the third quarter. But that was overshadowed by a 43% drop in mortgage income- Wells Fargo is the biggest mortgage lender in the United States. Shares of both JP Morgan Chase and Wells Fargo lost ground on Friday. A reunion for the Del Monte brand family. Singapore listed Del Monte Pacific will pay $1.7 billion for the U.S. canned food business of private equity backed Del Monte Foods Consumer Products. It will give them a direct presence in the key U.S. market. Over in Europe stocks edged higher - building on the previous session's rally on hopes of some resolution in Washington D.C.