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Pre-Market Primer: Shares Recover From Sell-Off; JPMorgan Chase & Co. and Other Big Banks Face Higher Reserve Ratios


Five of the big six banks might have to cut dividends to satisfy capital rules.

European and Asian markets rallied after yesterday's carnage and US futures are following suit this morning.

Yesterday was the worst equities route in over a year and a half. Global stock markets bled more than $1.8 trillion after the Federal Reserve again hinted that its monetary stimulus might be scaled back before the end of the year and economic data raised concerns about the health of China's economy.

After the major US indices all fell more than 2% yesterday, futures are pointing up ahead of the opening bell. Dow (INDEXDJX:.DJI) futures were up 0.51% at 14,776. Futures contracts on the S&P 500 (INDEXSP:.INX) rose 0.61% to 1,593.60 and Nasdaq (INDEXNASDAQ:.IXIC) futures climbed 0.52% to 2,895.00. Gold also recovered 0.60% to $1,293.90 and oil futures are flat. There are no major economic releases due out today.

St. Louis Fed chief James Bullard wrote a dovish news release saying that the Fed should wait much later to reduce its asset purchases.

"A more prudent approach would be to wait for tangible signs that the economy was strengthening and that inflation was on a path to return toward target before making such an announcement," he said.

Asian equities recovered from an initial drop after China's central bank injected 50 billion renminbi into the market to stabilize interest rates. European shares rallied strongly.

Oracle Corporation (NASDAQ:ORCL) lost 7.7% in after-hours trading despite doubling its dividend. The largest maker of database software reported lower-than-expected revenue as it struggles to gain market share in cloud-based products that its customers increasingly prefer. Adjusted earnings were $0.87 per share on $11 billion in sales. Oracle will raise its dividend to $0.12 and vowed to buy back $12 billion in stock.

Tesla Motors Inc (NASDAQ:TSLA) unveiled a new way to charge its electric Model S vehicles. A new robotic system for swapping batteries takes 90 seconds, much less than the half hour it takes to charge them.

Bloomberg reports that Washington is considering raising capital requirements for the largest US banks. The new regulation could double the reserve rate to 6% of total assets, regardless of their risk. The international standard minimum leverage ratio is 3%. Most big US banks, including JPMorgan Chase & Co (NYSE:JPM) and Citigroup Inc (NYSE:C) fall short of this reserve rate and might have to withhold dividends to meet the standard. Wells Fargo & Co (NYSE:WFC) already has a sufficient reserve ratio.

Twitter: @vincent_trivett
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