Stocks zigzagged on relatively low volume Monday. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^SPX) both ended the session down, but advancing issues outnumbered declining ones on both the New York Stock Exchange and the Nasdaq.
Today's stock market
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Technology shares led the market downward, with the Technology Select Sector SPDR ETF (NYSEMKT:XLK) sinking 1.6%. Gold-related stocks continued their recent rally; the VanEck Vectors Gold Miners ETF (NYSEMKT:GDX) rose 1.6%.
Sears files for bankruptcy
In a long-anticipated move, Sears Holdings filed for Chapter 11 bankruptcy, and announced that it is closing another 142 stores by the end of the year in hopes of emerging from bankruptcy with a smaller platform of profitable retail locations. Edward Lampert, the company's largest shareholder, will step down as CEO but will remain as chairman. Shares fell 23.8% to close at $0.31.
Sears has obtained $300 million in senior debtor-in-possession financing from its lenders and is seeking an additional $300 million in junior debt from ESL Investments, Lampert's hedge fund. The company expects the loans will allow its stores to remain open during the holiday season, although the locations in the newly announced closures will begin liquidation sales shortly.
"The Chapter 11 process will give Holdings the flexibility to strengthen its balance sheet, enabling the Company to accelerate its strategic transformation, continue right sizing its operating model, and return to profitability," said Lampert in the press release. "Our goal is to achieve a comprehensive restructuring as efficiently as possible, working closely with our creditors and other debtholders, and be better positioned to execute on our strategy and key priorities."
Investors in the stock will likely be completely wiped out and many of Sears' 140,000 employees will get laid off, although the company will continue to pay them until that happens. Customers may be wondering what will happen next, but Sears says it is continuing to honor its loyalty program and private-label credit cards.
Bank of America reports strong results
Higher interest rates, strong loan and deposit growth, and effective cost controls pushed Bank of America's third-quarter results above expectations, but the shares fell 1.9% anyway. Revenue grew 4.3% to $22.8 billion and earnings per share rose 43% to $0.66. Analysts were expecting the bank to earn $0.62 on revenue of $22.7 billion.
Bank of America's net interest yield -- what it makes loaning out customer deposits -- was 2.42%, up from 2.36% last quarter and 2.36% in the period a year ago. Consumer loans increased 6% to $285 billion and consumer deposits grew 4.3% to $687.5 billion. Net income from the bank's consumer segment, its largest, was up 49% to $3.1 billion. The company's other segments performed well, too, with net income growing 13% in global banking, 31% in global wealth and investment management, and 21% in its global markets investment banking unit. The bank's efficiency ratio, which is reflecting both strengthening loan quality and successful efforts to keep a lid on expenses, was 57%, an improvement over 59% last quarter and 61% in Q3 of 2017.
Investors are watching bank reports for signs of slowing in loan demand or other areas of weakness due to higher interest rates. But CEO Brian Moynihan gave reasons for optimism, saying in the press release, "Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history."