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The Markets Now: Investors Ambivalent Toward Banks After Stress-Test Results

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Plus, higher bond yields give life insurance companies a boost.

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Stocks pared earlier gains, but the three major US indexes still see gains. The Dow (INDEXDJX:.DJI) increased 0.30% to 14372.58. The S&P 500 (INDEXSP:.INX) increased 0.28% to 1,548.53, and the Nasdaq (INDEXNASDAQ:.IXIC) rose 0.24% to 3,239.77. The Bureau of Labor Statistics reported that the unemployment rate dropped from 7.9% in January to 7.7% in February, beating expectations of 7.8%. Private payrolls grew 246,000 in February, however, 296,000 individuals left the labor force last month. Currently, 89.3 million people in the US do not participate in the labor force.

Wholesale inventories increased 1.2% while wholesale sales decreased by 0.8% in January. The stock-to-sales ratio climbed to 1.21, the highest reading since last October. When expanded to the third decimal, January's stock-to-sales ratio is the highest of the recovery.

Goldman Sachs (NYSE:GS) passed the Federal Reserve's stress test of the US' 18 largest banks but overestimated its capital strength and ability to avoid losses on trading and lending in the event of a severe recession, according to the central bank. Shares of the company fell 2.51% to $152.69.

Bank of America (NYSE:BAC) passed the Federal Reserve's stress test, meaning it has enough capital to survive another severe recession, but shares of the company decreased 1.84% to $12.04.

Citigroup (NYSE:C) asked the Federal Reserve for permission to buy back $1.2 billion of shares. It won't ask for a dividend increase as it did in its proposal last year. Citigroup aims to "offset estimated dilution created by annual incentive compensations grants." Company shares rose 2.49% to $46.12.

H&R Block (NYSE:HRB) reported a larger quarterly loss than expected for its fiscal third quarter ending January 31 due to the delayed start of the US tax season. Its net loss from continuing operations expanded to $17 million, or $0.06 per share, compared to a loss of $3.6 million, or $0.01 per share, a year ago. Shares spiked 8.91% to $27.21 today, though, as CEO William Cobb said he believes that "industry filings will grow in line with historical levels of approximately 1% to 2%."

MetLife (NYSE:MET) increased 3.95% to $38.68 on a jump in bond yields after the unemployment rate reached a four-year low. Life insurance companies like MetLife invest funds from policyholders in bonds and other assets to back future payouts.

Twitter: @ChrisWitrak
No positions in stocks mentioned.
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