World Markets Fear Greece Led Contagion

Arthi Gupta, Mayank Mehta and Sanjay Barot
04 May, 2010
New York City

U.S. stocks declined sharply on the worries that the recent bailout may not prevent financial crisis from spreading. Euro declined to $1.31 and Greek bonds fell. U.S. auto sales increased in April. UBS posted higher than expected earnings.

[R]10:00 AM New York – U.S. stocks declined sharply on the worries that the recent bailout may not prevent financial crisis from spreading. Euro declined to $1.31 and Greek bonds fell. U.S. auto sales increased in April. UBS posted higher than expected earnings.[/R]

U.S. stocks fell sharply after investors feared that the recent Greek bailout may not prevent financial crisis spreading to Spain and Portugal, China reported manufacturing activities growth slowed and BP Plc declined after it struggled to contain the oil spill.

The Gulf oil spill continued to spread to wider region as BP Plc works to contain the damage. BP is building a relief well that will control the oil flow and is also giving millions of dollars to Gulf Coast states to move recovery efforts forward.

For the first four months total light vehicle sales increased 16.7% to 3.53 million from 3.02 million, passenger car sales rose 18.4% to 1.82 million from 1.54 million and light truck sales increased 14.9% to 1.71 million from 1.49 million.

In April, total auto sales increased to 982,131 from 819,685 from a year ago period. Passenger car sales in the month rose to 505,598 from 432,946 and light truck sales increased to 476,533 from 386,739.

Swiss financial services firm UBS AG reported a profit for the first quarter of fiscal 2010, compared with a loss last year, reflecting strong operating results in its investment bank business unit.

In the first quarter, the company posted net profit of Sfr2.20 billion or Sfr0.58 per share, compared with a loss of Sfr1.98 billion or Sfr0.57 per share a year ago.

Americold Realty Trust announced the launch of its initial public offering of 43 million common shares. The initial public offering price is expected to be between $14.00 and $16.00 per share and underwriters have the option to purchase up to an additional 6.45 million common shares.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.3116 and decreased against the Japanese yen to 94.51.

Crude oil decreased $1.38 to $84.81 a barrel for a front month contract, natural gas edged lower $0.02 cent to $3.98 per mBtu and gasoline decreased 4.040 cents to 239.47 cents.

Gold increased $3.40 in New York trading to close at $1,186.70 per ounce, silver closed lower $0.125 to $18.71 per ounce and copper for the front month delivery decreased 2.850 cents to $3.50 per pound.

Yields on 10-year U.S. bonds increased to 3.66% and on 30-year U.S. bonds traded at 4.51%.

Stock Movers

LeapFrog Enterprises, Inc., the maker of LeapPad electronic children’s books plunged 14.1%. Net loss per share was $0.37, higher than expected by analysts.

McKesson Corporation added 3.4% after the pharmaceutical distributor said the board of directors authorized an additional share repurchase of $1 billion, bringing the total authorization to more than $1.5 billion.

NutriSystem Inc., the provider of weight management products and services reported first quarter earnings per share of 15 cents a share compared to 29 cents a share a year ago.

Powerwave Technologies, Inc. dropped 6.7% after the maker of wireless communications products reported first quarter net loss of $7.1 million or 5 cents per share.

Technitrol, Inc. plunged 11.2% after the maker of electronic components said first quarter loss narrows on lower expenses.

Earnings Review

EOG Resources, Inc. ((EOG)), the oil and natural gas producer said first quarter revenues rose 18% to $1.37 billion from $1.16 billion a year ago. Net income in the quarter fell 25.6% to $118.0 million or 46 cents per diluted share compared to net income of $158.7 million or 63 cents per share a year ago.

Merck & Co., Inc ((MRK)), the drugmaker reported first quarter sales rose 112% to $11.42 billion from $5.39 billion a year ago. Net income in the quarter fell 79% to $298.8 million or 9 cents per diluted share compared to net income of $1.43 billion or 67 cents per share a year ago.

Pfizer Inc ((PFE)), the drugmaker reported first quarter sales rose 54% to $16.75 billion from $10.87 billion a year ago. Net income in the quarter fell 25.6% to $2.03 billion or 25 cents per diluted share compared to net income of $2.73 billion or 40 cents per share a year ago.

Asian Markets Review

Hang Seng index in Hong Kong decreased 48.31 or 0.23% to 20,763.05 and CSI 300 index in China lower 47.92 or 1.56% to 3,019.45. ASX 200 index in Australia decreased 48.40 or 1.01% to 4,737.10. The FTSE Bursa KL Composite index in Malaysia closed lower 4.00 or 0.30% to 1,342.89 and the markets in Japan were closed today.

The Kospi Index in South Korea decreased 2.46 or 0.14% to close at 1,718.75. SET index in Thailand closed higher 33.35 or 4.37% to 796.86 and JSE Index in Indonesia decreased 1.88 or 0.06% to 2,959.02. The Sensex index in India decreased 248.94 or 1.43% to 17,137.14.

Europe Markets Review

In London FTSE 100 Index traded lower 59.01 or 1.06% to 5,494.28, in Paris CAC 40 Index decreased 53.86 or 1.41% to 3,774.60 and in Frankfurt DAX index traded lower 47.44 or 0.77% to 6,119.48. In Zurich trading SMI decreased 22.09 or 0.33% to 6,585.62.