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The stock market finally got a breather on Tuesday, but it wasn’t particularly impressive. The gain of just a single point for the Nasdaq Composite (^IXIC 0.13%) highlighted just how hard it has been for markets to move higher in 2022, with only slightly larger gains for the Dow Jones Industrial Average (^DJI 0.40%) and S&P 500 (^GSPC 0.26%).
Index
Daily Percentage Change
Daily Point Change
Dow
+0.28%
+92
S&P 500
+0.10%
+4
Nasdaq
+0.01%
+1
Data source: Yahoo! Finance.
Some of the biggest news on Tuesday came from companies trying to resolve differences with regulators. Both Wells Fargo (WFC -1.73%) and Amazon.com (AMZN 0.35%) made substantial progress getting some disputes behind them, and investors are hopeful that the resolutions will help get their stock prices moving back in the right direction.
Shares of Wells Fargo lost 2% on Tuesday. The banking giant reached a massive settlement related to some of the numerous abusive practices that it has allegedly used in recent years.
Wells Fargo said early Tuesday that it had agreed to a settlement with the Consumer Financial Protection Bureau (CFPB) to resolve issues related to automobile lending, consumer deposit accounts, and mortgage lending. Many of those problems have been outstanding for years, and Wells Fargo was pleased to enter into a consent order that will offer a way forward that could finally get these issues behind it.
The settlement will be costly, though. Wells Fargo agreed to pay a civil penalty of $1.7 billion as part of the CFPB deal. In addition, it will cost the bank about $2 billion more to help resolve the problems that plagued more than 16 million Wells Fargo customers, which allegedly included wrongful repossession, improper fees and interest on loans, and unlawful overdraft fees.
For its part, Wells Fargo noted that the CFPB did recognize the efforts the bank has made to take corrective action over the past few years. Yet many analysts believe that Wells Fargo could still face other regulatory challenges, suggesting that the worst still might not yet be over for the banking giant.
Elsewhere, shares of Amazon were up less than 1% on Tuesday. The e-commerce giant reached a settlement with regulators in the European Union that resolved considerable uncertainty in a key dispute.
Amazon faced allegations in multiple investigations about potential antitrust violations. One case pointed to Amazon’s size, power, and data-collection capabilities as helping it get a competitive advantage for its own products over those of the merchants who list their own goods on the Amazon platform. A second case pointed to Amazon’s practice of ranking different sellers when e-commerce customers seek to buy products.
Under the terms of the settlement, the e-commerce company will now stop using seller-related data to promote its own retail business and products. In addition, it will change the layout of its purchase page to display rival products in certain situations in which there are substantial price differences.
That said, the EU still retains considerable power to enforce the terms of the settlement. With massive fines still at play, Amazon will have every incentive to stick to the deal and avoid raising the ire of European antitrust regulators, once again. With the EU looking closely at other big tech-related stocks, that should be a weight off the shoulders of Amazon investors.
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dan Caplinger has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.
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