Citigroup's Fed Failure Sours the Market

Pfizer slips on the Dow despite yet another big day for the pharma giant.

Mar 27, 2014 at 2:30PM
Daily Fool

Stocks have hit a bumpy patch on Thursday, wobbling between meager gains and slight losses throughout trading.The Dow Jones Industrial Average (DJINDICES:^DJI) has slipped back 12 points into the red as of 2:30 p.m. EDT, with the blue-chip index's stocks evenlyh split between winners and losers. Despite little action from its stock today, Pfizer's (NYSE:PFE) active week goes on with yet another strong clinical study result. The big news from around the markets, though, is the sell-off that has sent Citigroup (NYSE:C) shares down more than 5.5%. Let's catch up on what you need to know.

Economic picture ticks higher
The Commerce Department started things off on the right foot this morning by revising upward its GDP growth figure for the fourth quarter of 2013 from 2.4% to 2.6%. Increased health-care spending added most of that revision, but it was a solid end to 2013 ahead of what could be a downbeat start to 2014's U.S. economic growth picture thanks to the harsh winter that slammed consumers and businesses alike. Despite that, economists have pegged potential U.S. economic growth this year at up to 3% -- a very healthy mark if attained, and one showing that the nation's recovery track remains on target.

Around the stock market today, Pfizer stock fell 0.2% despite good news out of one of the company's most closely watched developmental drugs. PCSK9-inhibitor bococizumab, an experimental treatment for fighting cholesterol, ended up a success in the company's most recent phase 2b study.

It's positive news for a company dueling with numerous other major pharma and biotech companies to capture the PCSK9 market, a new and growing niche in the fight against cholesterol that could be worth billions of dollars in annual revenue. Pifzer's launched a phase 3 trial for bococizumab last year, so keep a close eye on how it develops as rivals speed up to win over regulators.

Citi Sign

Source: Wikimedia Commons.

Perhaps today's biggest market news comes outside of the Dow -- Citigroup's capital plan failed the Federal Reserve's stress test. The Fed denied Citi's goal to raise dividends and share buybacks, criticizing the bank's capital position as insufficient in the event of another major economic pullback in the future. While Citigroup's capital cushion did surpass the federal minimum set by regulators, the company couldn't keep up with banking rivals that got the OK from the Fed, leading to the stock's hammering on the market today. It's not good news for investors: While Citi can submit a revised plan, it'll be hard to win over the Fed toward allowing giving back more to shareholders in the wake of the defeat.

Don't let the market's bumps shake your investing foundation
Citi's plunge today shouldn't slam your financial confidence. Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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