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Midday Market Update

Stocks Lower After Bank Stress Test Results, Data

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U.S. Market    
Stocks broke their winning streak this morning after economic data and the release of the Federal Reserve’s latest round of big bank stress tests last night.

The Fed said late yesterday that  BB&T (BBT) and Ally Financial failed its stress test of the 18 largest financial institutions. Ally was cited for not having a large enough capital cushion while BB&T's dividend and stock buyback plan was criticized. The central bank also expressed concern about  J.P. Morgan (JPM) and  Goldman Sachs (GS) capital plans; both will need to submit to additional regulatory review in six months.  Separately, a U.S. Senate committee accessed J.P. Morgan of misleading investors and regulators about potential risks in its trading and derivatives business.

The consumer price index rose 0.7% in February thanks mainly to higher gas prices. Economists had expected an overall increase of 0.6%. Excluding the volatile energy and good sectors, consumer prices rose 0.2% in the month.

Industrial production rose a better-than-expected 0.7% in February. Capacity utilization moved up to 79.6% from 79.2%. Consumer durable goods manufacturing was the largest contributor to the increase.

Consumer sentiment fell in early March according to the Reuters/University of Michigan survey. The reading of 71.8 was well below analyst expectations of 78 and February’s reading of 77.6. One-year inflation expectations remained steady at 3.3%.

At midday the Dow and Nasdaq were down 0.2% while the S&P 500 was off 0.1%.

Stocks on the Move
Samsung announced its long-awaited Galaxy S 4 smartphone late Thursday, and at first glance,  we're impressed by some of the new and innovative services associated with the device and expect it to be a worthy challenger to  Apple's (AAPL) iPhone in the premium smartphone market. Our initial take is that the GS4 will continue to make the premium smartphone market a two-horse race between Samsung and Apple. We certainly see the GS4 as a compelling device for new smartphone adopters and current Android users, and it may crush the efforts of HTC,  Blackberry (BBRY) and  Nokia (NOK) to regain share in the premium smartphone market.

 Boeing (BA) raised hopes for a swift resolution to its 787 battery woes today. The firm said that its fix for the battery troubles that grounded the fleet in January could be ready for implantation in a few weeks, pending approval by the FAA. Boeing shares were up 1.9% at midday.

Foreign Markets
European shares were mostly lower on the day. In late trading, Germany’s DAX, the FTSE 100 and Paris CAC were off 0.3%, 0.5% and 0.6% respectively.

Asian markets were mixed today. The Shanghai Composite was up 0.4, the Nikkei 225 was 1.5% higher while the Hang Seng was down 0.4%.

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.