Citigroup: Cut to Profit Winner
NEW YORK ( TheStreet) -- Citigroup (C) was the big winner among the largest U.S. financial names on Wednesday, with shares rising over 6% to close at $36.46, after the company announced a major initiative to cut expenses and narrow its focus.
The Dow Jones Industrial Average (^DJI) rose 1% and S&P 500 (SPX.X) was up slightly, with not only Citigroup pulling its weight but Bank of America (BAC) rising nearly 6% to close at $10.46, on the strength of several good economic reports.
The NASDAQ Composite (^IXIC) ended down slightly as shares of Apple (AAPL) dropped over 6% to close at $538.81, after a report from Street Insider that COR Clearing had raised its margin requirement on Apple shares to 60% from 30% because of a "high concentration" of ownership.
Meanwhile, DigiTimes reported that Apple could be facing a supply shortage.
Investors seemed to take the day off from worrying over the fiscal cliff, even though both sides seemed to be dug-in for a last-minute game of brinkmanship. President Obama made clear during a Bloomberg interview that he would insist that tax rates rise on "the upper income folks," while Speaker of the House John Boehner (R-Ohio), touted a different approach that the Republicans said would increase federal government revenue by $800 billion over ten years, without raising tax rates.
Automated Data Processing said on Wednesday that the U.S. economy added 118,000 private sector jobs during November. The payroll processor said that the rate of job creation declined from a revised 157,000 during October. Moody's Analytics chief economist Mark Zandi said Hurricane Sandy "wreaked havoc on the job market in November, slicing an estimated 86,000 jobs from payrolls," as "the manufacturing, retailing, leisure and hospitality, and temporary help industries were hit particularly hard by the storm. Abstracting from the storm, the job market turned in a good performance during the month."
In other economic news, The ISM Non-Manufacturing Index showed an increase to 54.7 in November from 54.2 in October. An index reading over 50 indicates expansion. The Census Bureau reported that factory orders rose 0.8% in October after increasing by a downwardly revised 4.5% in September.
The KBW Bank Index (I:BKX) rose 2% to close at 48.64, with all but three of the 24 index components rising for the session.
Corbat Acts to Right-size Citi
Citigroup announced a series of moves meant to lower its annual expenses by $900 million in 2013, with total expense savings increasing to $1.1 billion in 2014. The company expects its annual revenue to decline by only $300 million as a result of the closure of 84 branch offices, including 44 in the United States, as offices in Brazil, Hong Kong, Hungary, and South Korea.