Fed investigation into Wells Fargo broadens

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A federal investigation into Wells Fargo has broadened to include its wealth-management division, according to a Wall Street Journal report.

Wells Fargo is wrestling with the aftermath of a scandal in its retail banking unit in which, among other things, employees opened up millions of fake accounts without customer authorization.

The Justice Department is now investigating whether Wells Fargo made inappropriate recommendations or referrals, or failed to inform customers about potential conflicts of interest, the Journal reported, citing unnamed people familiar with the matter.

A bank spokesman declined to comment on the report Friday.

The bank previously disclosed in a securities filing that it is conducting its own internal investigation into its wealth-management business, and is reviewing the fees it charged customers in those accounts, including potential overcharges. Both of those investigations are in the early stages, the bank said.

Earlier this year, the Federal Reserve put significant restrictions on the San Francisco bank citing “widespread consumer abuses.” The bank is replacing four members of its board and its asset level has been frozen by the Fed until internal controls are improved.

Separate from the sales-practices and the reported wealth-management investigations, Wells Fargo is under investigation for potentially overcharging corporate customers in foreign-exchange transactions as well as an investigation into its auto-lending business, where it forced auto insurance policies onto customers who did not need them.

U.S. Market Weekly Summary – Week Ending 03.16.2018

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The Standard & Poor’s 500 index closed Friday’s session down 1.2% from last Friday as a broad decline led by the materials and financial sectors handily outweighed weekly gains in just two sectors: utilities and real estate.

The market benchmark ended the week at 2752.01, down from last week’s closing level of 2,786.57.

The drop came as worries about higher interest rates sent gold futures lower while the US dollar strengthened. Worries about a trade war also weighed, especially on the materials and industrial sectors.

The materials sector fell 3.2% this week, marking the largest percentage decline among the S&P 500’s 11 sectors. Among the sector’s decliners, gold-and-copper miner Freeport-McMoRan (FCX) slipped 0.4% on the week.

The financial and consumer-staples sectors had the next-largest percentage declines this week, down 2.4% and 2.1%, respectively, followed by a 2.0% drop in industrials.

Just two sectors were able to eke out weekly gains: utilities, up 2.6%, and real estate, up 1.3%. Utilities stocks tend to benefit when investors are looking for safety given that utilities are typically seen as necessary and thus in demand in any economic environment.

In the financial sector, shares of Discover Financial Services (DFS) shed 2.4% this week as the payment-services company released monthly credit-card data showing its delinquency rate was 2.4% in February, matching the January rate but up from 2.1% a year earlier.

The industrial sector’s decliners included shares of Stericycle (SRCL), which lost 1.7% this week as the medical-waste-disposal company reported Q4 adjusted earnings per share below analysts’ mean estimate. The company also forecast 2018 revenue below analysts’ consensus view even as its forecast for 2018 adjusted EPS bracketed the Street view.

On the upside, the gainers in the utilities sector included Duke Energy (DUK), whose shares edged up 1.9% this week. RBC Capital Markets issued a note to clients saying it considers the management team at the electric-power holding company “to be one of the best at managing its regulatory relationships and [thinks] the strength in its largest jurisdiction, North Carolina, should prove particularly useful in 2018 as more clarity on tax reform comes out.“ Still, the firm trimmed its price target on Duke’s shares to reflect the $2 billion of equity Duke plans to issue this year.

Metropolitan Area Employment and Unemployment (Monthly)

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Unemployment rates were lower in January than a year earlier in 337 of the 388 metropolitan areas, higher in 39 areas, and unchanged in 12 areas, the U.S. Bureau of Labor Statistics reported today. Twenty-eight reas had jobless rates of less than 3.0 percent and four areas had rates of at least 10.0 percent. Nonfarm payroll employment increased over the year in 295 metropolitan areas, decreased in 78 areas, and was unchanged in 15 areas. The national unemployment rate in January was 4.5 percent, not seasonally adjusted, down from 5.1 percent a year earlier.

Metropolitan Area Unemployment (Not Seasonally Adjusted)

In January, Ames, IA, had the lowest unemployment rate, 1.8 percent, followed by Urban Honolulu, HI, 2.0 percent. El Centro, CA, had the highest unemployment rate, 17.0 percent. A total of 192 areas had January jobless rates below the U.S. rate of 4.5 percent, 187 areas had rates above it, and 9 areas had rates equal to that of the nation.

Rockford, IL, had the largest over-the-year unemployment rate decrease in January (-5.0 percentage points). An additional 118 areas had rate declines of at least 1.0 percentage point. The largest over-the-year rate increase occurred in Fairbanks, AK (+0.5 percentage point).

Of the 51 metropolitan areas with a 2010 Census population of 1 million or more, Nashville-Davidson—Murfreesboro—Franklin, TN, had the lowest unemployment rate in January, 2.8 percent. Buffalo-Cheektowaga-Niagara Falls, NY, had the highest jobless rate among the large areas, 6.2 percent. Forty-seven large areas had over-the-year unemployment rate decreases, three had increases, and one had no change. The largest
rate decrease occurred in Birmingham-Hoover, AL (-1.9 percentage points). The largest over-the-year rate increase was in Seattle-Tacoma-Bellevue, WA (+0.4 percentage point).

Metropolitan Division Unemployment (Not Seasonally Adjusted)

Eleven of the most populous metropolitan areas are made up of 38 metropolitan divisions, which are essentially separately identifiable employment centers. In January, San Francisco-Redwood City-South San rancisco, CA, and San Rafael, CA, had the lowest unemployment rates among the divisions, 2.5 percent each. Tacoma-Lakewood, WA, had the highest division rate, 6.0 percent.

In January, 34 metropolitan divisions had over-the-year unemployment rate decreases, 3 had increases, and 1 had no change. The largest rate decline occurred in Elgin, IL (-1.6 percentage points). The largest over-the-year jobless rate increase occurred in Seattle-Bellevue-Everett, WA (+0.5 percentage point).

Metropolitan Area Nonfarm Employment (Not Seasonally Adjusted)

In January, 295 metropolitan areas had over-the-year increases in nonfarm payroll employment, 78 had decreases, and 15 had no change. The largest over-the-year employment increases occurred in Los Angeles-Long Beach-Anaheim, CA (+114,600), New York-Newark-Jersey City, NY-NJ-PA (+104,000), and Dallas-Fort Worth-Arlington, TX (+85,800). The largest over-the-year percentage gains in employment occurred in
Midland, TX (+10.3 percent), Ocean City, NJ (+7.9 percent), and Odessa, TX (+7.2 percent).

The largest over-the-year decrease in employment occurred in Naples-Immokalee-Marco Island, FL (-5,200), followed by Bridgeport-Stamford-Norwalk, CT (-4,300), and Youngstown-Warren-Boardman, OH-PA (-3,100). The largest over-the-year percentage decrease in employment occurred in Enid, OK (-4.6 percent), followed by Sierra Vista-Douglas, AZ (-3.9 percent), and Naples-Immokalee-Marco Island, FL (-3.5 percent).

Over the year, nonfarm employment rose in all 51 metropolitan areas with a 2010 Census population of 1 million or more. The largest over-the-year percentage increases in employment in these large metropolitan areas occurred in Austin-Round Rock, TX, and Riverside-San Bernardino-Ontario, CA (+3.7 percent each), followed by Orlando-Kissimmee-Sanford, FL (+3.4 percent).

Metropolitan Division Nonfarm Employment (Not Seasonally Adjusted)

In January, nonfarm payroll employment increased in 34 of the 38 metropolitan divisions over the year and fell in 4. The largest over-the-year increase in employment among the metropolitan divisions occurred in New York-Jersey City-White Plains, NY-NJ (+91,000), followed by Los Angeles-Long Beach-Glendale, CA (+75,500), and Dallas-Plano-Irving, TX (+64,400). The over-the-year decreases occurred in Framingham, MA (-1,700), Wilmington, DE-MD-NJ (-1,500), Gary, IN (-1,300), and Peabody-Salem-Beverly, MA (-1,100).

The largest over-the-year percentage increase occurred in Seattle-Bellevue-Everett, WA (+3.3 percent), followed by Haverhill-Newburyport-Amesbury Town, MA-NH (+2.9 percent), and Brockton-Bridgewater-Easton, MA; Dallas-Plano-Irving, TX; and San Rafael, CA (+2.6 percent each). The over-the-year percentage decreases occurred in Peabody-Salem-Beverly, MA (-1.2 percent), Framingham, MA (-1.0 percent), Gary, IN (-0.5 percent), and Wilmington, DE-MD-NJ (-0.4 percent).

Job Openings and Labor Turnover Survey

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The number of job openings increased to 6.3 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.2 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions. The release also includes 2017 annual estimates for hires and separations. The annual number of hires at 65.3 million and the annual number of quits at 38.2 million increased in 2017. The annual number of layoffs and discharges at 20.7 million edged up in 2017.

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