Wall Street pushes back against SEC stock market reforms

The New York Stock Exchange teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities on Monday to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.

The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.

“We are deeply concerned that the Commission has simultaneously issued multiple far-reaching proposals that would dramatically overhaul current market structure without adequately assessing the cumulative impact on the market or the potential for unintended consequences,” the companies said in an SEC comment letter.

The SEC in December proposed requiring nearly all retail stock orders to be sent to auctions, as well as a new standard for brokers to show they get the best possible executions for their clients’ orders, along with lower trading increments and access fees on exchanges, and more robust retail order execution disclosures.

The aim of the proposed rules is to improve market quality and efficiency, by boosting competition for retail stock orders and reducing unnecessary intermediation, SEC Chair Gary Gensler has said.

The NYSE, along with Schwab and Citadel Securities, asked the SEC to indefinitely withdraw the auction and best execution proposals, saying that they could lead to less market liquidity and create confusing regulatory overlap.

“We believe that this more targeted approach will result in significant benefits for U.S. equity market participants, while meaningfully reducing the risk of negative outcomes for markets and investors, including the risk of firms retreating from being liquidity providers - which would be particularly detrimental to retail investors,” they said.

ut they don’t want to be left behind.”

Economic data released on Friday showed steady demand for services, with purchasing managers’ indexes (PMI) from the Institute for Supply Management and S&P Global indicating that activity in the sector continues to expand even as input prices cool.

“Investors saw what they wanted in the ISM data, which was basically healthy growth with slowing prices,” Carter said, adding: “It suggests they are willing to stay on the plane as they are less worried about the landing.”

The Dow Jones Industrial Average rose 387.4 points, or 1.17%, to 33,390.97, the S&P 500 gained 64.29 points, or 1.61%, to 4,045.64 and the Nasdaq Composite added 226.02 points, or 1.97%, to 11,689.01.

All 11 major sectors of the S&P 500 ended the session green, with tech and consumer discretionary enjoying the largest percentage gains.

Fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. Results for the quarter have beaten consensus estimates 68% of the time, according to Refinitiv.

Still, on aggregate, analysts believe S&P 500 earnings will have fallen 3.2% in the fourth quarter compared to the prior year, and expect negative year-on-year numbers for the first two quarters of 2023. This would imply the S&P 500 entered a three-quarter earnings recession in the closing months of 2022, per Refinitiv.

Apple Inc jumped 3.5% after Morgan Stanley said the stock could rally more than 20% this year on a potential hardware subscription.

Broadcom Inc advanced 5.7% after the chipmaker forecast second-quarter revenue above analysts’ estimates as increased investments in AI spurred demand for chips.

Among losers, Costco Wholesale Corp slipped 2.1% on the heels of its revenue miss, as high inflation dampened consumer demand.

Chipmaker Marvell Technology Inc slid 4.7% in the wake of the company’s quarterly profit miss and disappointing revenue forecast.

Advancing issues outnumbered declining ones on the NYSE by a 4.54-to-1 ratio; on Nasdaq, a 2.36-to-1 ratio favored advancers.

The S&P 500 posted 23 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 79 new highs and 57 new lows.

In currency markets, the U.S. dollar index, measuring its value against a basket of major peers, gained 0.6% at $105.111. The index is now up about 1.5% for the year, but still down from a September high around $114.

The euro lost 0.75% and the pound dropped 0.8%, with hotter-than-expected inflation numbers adding pressure on the ECB to raise rates.