Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The Dow Jones Industrial Average (DJINDICES: ^DJI ) is falling today, with 23 of its 30 stocks in the red. Today's big news is the release of the Volcker rule, 900 pages of rules and regulations for how banks trade their own assets. As of 1:30 p.m. EST, the Dow was down 41 points to 15,984. The S&P 500 (SNPINDEX: ^GSPC ) was down five points to 1,803.
Goldman Sachs (NYSE: GS ) and JPMorgan Chase (NYSE: JPM ) are both climbing after the release of the Volcker Rule which has been in the works for three years. Banks until July 2015 to come into compliance with the rule. The Federal Deposit Insurance Corporation and the Federal Reserve Board approved the rule unanimously, while the Securities and Exchange Commission OK'd the rule in a 3-2 vote on party lines.The main aims of the regulations are to restrict banks from proprietary trading -- trades using their own money -- and from sponsoring hedge funds and private equity firms.
Wall Street has been lobbying heavily to water down the rules, and it won some concessions. Notable exemptions include market-making activities, risk-mitigating hedging, trading in U.S. government securities, and trading activities of foreign banks.
It remains to be seen how strictly the rule is written, but stronger operators like Goldman Sachs and JPMorgan will undoubtedly benefit from the complexity relative to weaker banks. A better method would have just been to require banks to hold more capital.
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