US open: Stocks edge lower as Wells Fargo underwhelms

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LONDON (ShareCast) - - Wells Fargo leads banks lower despite in-line Q2
- Evans paints dovish picture, George hawkish
- Imperial in talks to buy assets from Lorillard (NYSE: LO - news) , Reynolds

Dow Jones: -0.23%
Nasdaq: +0.09%
S&P 500: -0.19%

An absence of economic data, underwhelming results from Wells Fargo & Co and comments from a number of policymakers prompted a weak start on Wall Street on Friday as investors rounded off the week in a cautious mood.

Following on from a sell-off on the back of concerns about Portugal's banking sector on Thursday, US markets opened in the red once again with the Dow Jones Industrial Average and S&P 500 both losing 0.2% shortly after the opening bell. The Nasdaq, meanwhile, gained 0.1%.

Speaking at the Federal Reserve's gathering in Jackson Hole, Wyoming, the President of the Chicago Fed, Charles Evans, said he sees no signs of inflation. Evans, who is to become a voting member of the Federal Open Market Committee (FOMC) next year, said that inflation will not rise to 2% within two years and he will not vote for a hike in interest rates until the first quarter of 2016.

In contrast, Kansas City Fed President Esther George last night highlighted positive developments in the US labour market and said inflation was running closer to the Fed's target. George, who isn't a voting member of the FOMC, said that the Fed could begin to raise rates "as early as even this year".

Wells Fargo leads banks lower despite in-line Q2

Second-quarter figures from Wells Fargo & Co were being closely watched today with the company being the first of the major US banks to report results this earnings season.

The group, which is the largest mortgage provider in the States, reported a 3% rise in earnings to 101 cents a share, up from 98 cents the year before and as expected by analysts, but shares declined early on. Revenue slipped to $21.1bn from $21.4bn but came in slightly ahead of the $20.84bn forecast.

Banking peers Citigroup (NYSE: C - news) , JPMorgan Chase & Co (Xetra: 850628 - news) and Goldman Sachs (NYSE: GS-PB - news) were also in negative territory in morning trade.

Lorillard and Reynolds American (NYSE: RAI - news) were in focus after UK group Imperial Tobacco (LSE: IMT.L - news) said it was in talks with the companies about possibly buying certain brands or assets. Lorillard gained strongly early on, while Reynolds declined.

It is thought that Reynolds and Lorillard, the second- and third-largest cigarette makers in the States respectively, are looking to sell assets in a bid to win over competition authorities ahead of their rumoured merger.

BC

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