Capital One Shuts Mortgage Unit, Cuts Jobs

Elena
21 Aug, 2007
New York City

Wall Street lacked direction at opening hours, reflecting further credit problems and uncertainty about what the Fed Reserve''s next move might be to steady the markets and the economy. Countrywide Financial rose 2.9% on speculations it might be a takeover target due to losses related to subprime mortgages. Capital One Financial added 1.9% announced a decision to close its wholesale mortgage business and reduce 1,900 jobs.

[R]09:45AM Wall Street lacked direction at opening amid further credit markets problems.[/R]

Wall Street lacked direction at opening hours, reflecting further credit problems and uncertainty about what the Fed Reserve's next move might be to steady the markets and the economy.

Countrywide Financial ((CFC)) rose 2.9% on speculations it might be a takeover target due to losses related to subprime mortgages. Capital One Financial ((COF)) added 1.9% announced a decision to close its wholesale mortgage business and reduce 1,900 jobs.

Better-than-expected earnings reports from several retailers provided some boost to the market sentiment. Target Corp. ((TGT)) added 0.6% after the discount giant reported 13% earnings increase and improved gross margins.

However, shares of Staples ((SPLS)) fell 1.8% after posting a lower-than-expected 11% profit rise. Shares of Saks ((SKS)) dropped 2.5% after theretailer said it narrowed Q2 losses to 17 cents a share, from 15 cents a share a year ago.

In the first hour of trading, the Dow Jones industrial average fell 14.80, or 0.11%, to 13,106.55, having moved in and out of positive territory. The Standard & Poor's 500 index was down 0.87, or 0.06%, at 1,444.68, and the Nasdaq composite index edge up 2.02, or 0.08%, to 2,510.61. Bonds were flat, with the yield on the benchmark 10-year Treasury note at 4.60%.


[R]09:00AM U.S. stock futures advanced, lifted by hopes the Fed Reserve will cut interest rates.[/R]

U.S. stock futures advanced on Tuesday, boosted by optimism that the Federal Reserve will make further steps by cutting its main base rate in order to relieve continuous global credit worries.

Banc of America Securities ((BAC)) downgraded a number of home builders, including Toll Brothers ((TOL)), Hovnanian Enterprises ((HOV)) and Standard Pacific ((SPF)), saying cancellations jumped as lenders pulled commitments from buyers already in the backlog and new buyers failed to qualify.

At the same time, Capital One Financial ((COF)) announced a decision to close its wholesale mortgage business and reduce 1,900 jobs as the credit card giant loses confidence in the profitability of originating home loans. The stock gained 1.2% in pre-market trading.

On the earnings news front, Target Corp. ((TGT)) said its Q2 net income rose 13% to $686 million, or 80 cents a share, up from $609 million, or 70 cents a share a year ago, meeting estimates. Company’s revenue increased 9.5% to $14.62 billion, slightly below expectations of revenue of $14.67 billion. The company''s same-store sales rose 4.9%.

Among other retailers posting financial results, American Eagle Outfitters ((AEO)) reported a 13% profit rise and Staples ((SPLS)) posted 11% earnings rise.

After early losses, S&P 500 futures rose 3.8 points at 1,452.90 and Nasdaq 100 futures climbed 2.5 points at 1,900.25. Dow industrial futures rose 26 points.