USA/FILE: Wall Street bounces to end a four-day skid as retailers gain and a U.S. judge approves a Citigroup $730 million (USD) bondholder settlement

Record ID: 187269

  • Title: USA/FILE: Wall Street bounces to end a four-day skid as retailers gain and a U.S. judge approves a Citigroup $730 million (USD) bondholder settlement
  • Date: 20th August 2013
  • Summary: NEW YORK CITY, NEW YORK, UNITED STATES (FILE) (REUTERS) VARIOUS OF CITIBANK EXTERIORS
  • Embargoed: 4th September 2013 13:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: Economy
  • Reuters ID: LVA3TQ42ZFEOAVWSNC89W145AAPD
  • Story Text: The S&P 500 bounced on Tuesday (August 20) to end a four-day losing skid, as earnings from Best Buy and TJX Cos helped buoy retailers and consumer discretionary stocks.
    TJX Cos was the top boost to the S&P 500 after the owner of the discount T.J. Maxx and Marshalls chains reported better-than-expected quarterly sales, bucking a trend of weak results by a number of retailers. Its shares gained 6.9 percent to $54.24 (USD).
    The S&P retail index climbed 1.2 percent while the S&P consumer discretionary index rose 0.9 percent as the best performing of the 10 major S&P sectors.
    But U.S. Treasuries yields, although down from Monday (August 19), were still at two-year highs, encouraging investors to dump riskier assets like stocks to buy U.S. government debt. The yield on the benchmark 10-year note dipped to as low as 2.80 percent on Tuesday from 2.88 percent in the prior session.
    Along with TJX, Best Buy and J.C. Penney also rose after they posted results. Consumer-focused shares had recently been battered as retailers that reported earnings earlier in the period had disappointed investors.
    The Dow Jones industrial average fell 7.75 points or 0.05 percent, to 15,002.99, the S&P 500 gained 6.29 points or 0.38 percent, to 1,652.35 and the Nasdaq Composite added 24.504 points or 0.68 percent, to 3,613.59.
    The S&P was unable to hold gains above its 50-day moving average, closing for a third straight session below the 1,657.65 level, which now serves as a technical resistance point.
    Also on Tuesday, a federal judge approved a settlement in which Citigroup Inc agreed to pay bondholders $730 million to resolve claims that the bank concealed its exposure to billions of dollars of toxic mortgage assets prior to the financial crisis.
    U.S. District Judge Sidney Stein in Manhattan approved the settlement on Tuesday, less than three weeks after approving a similar $590 million settlement for Citigroup shareholders.
    Lawyers for the bondholders have said the latest settlement is the second-largest recovery in securities class-action litigation ever brought on behalf of bond investors.
    The settlement resolves claims by investors who bought Citigroup bonds and preferred stock in 48 offerings between May 2006 and August 2008, in which the bank raised more than $71 billion, court papers show.
    They accused Citigroup of downplaying its exposure to roughly $166 billion of collateralized debt obligations and structured investment vehicles backed by risky assets such as subprime mortgages, overstating the credit quality of those assets and understating its reserves to offset loan losses.
    Stein said the settlement was fair, reasonable and adequate, even though the bondholders might otherwise have deserved more.
    The New York-based bank denied wrongdoing in agreeing to settle. "Citi is pleased to put this matter behind us," said Citigroup spokesman Mark Costiglio.
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