Nasdaq, S&P 500 Down 1.7%; Jobless Claims Rise

123jump.com Staff
19 Aug, 2010
New York City

U.S. indexes dropped more than 1.5% and the widespread sell off in tech and small cap stocks was sparked by a rise in weekly jobless claims. Indexes in Europe dropped nearly 2% and Brazil lost more than 1.2%. Crude oil edged lower.

[R]4:00 PM New York – U.S. indexes dropped more than 1.5% and the widespread sell off in tech and small cap stocks was sparked by a rise in weekly jobless claims. Indexes in Europe dropped nearly 2% and Brazil lost more than 1.2%. Crude oil edged lower. The economic weakness is likely to persist until job market recovers.[/R]

The Dow, S&P 500 and the Nasdaq indexes dropped more than 1.5% after weekly jobless claims rose 12,000 to 500,000. The selloff was widespread and tech stocks and smaller stocks in the Russell index led decliners. Merger talks and deals did not lift the investors’ sentiment. Indexes in Europe dropped nearly 2% and in Canada declined 0.6% and Brazil fell 1.1%.

Intel agreed to acquire McAfee for $7.68 billion. MasterCard agreed to buy DataCash for $520 million. Las Vegas Sands agreed to pay $1 billion in debt.

Intel declined more than 3% after it agreed to acquire McAfee for $7.7 billion. Dollar Tree, Inc increased 4% after quarterly net surged 37%. PetSmart, Inc surged 10% on better than expected earnings.

Applied Materials Inc quarterly sales increased 123% and swings to net profit. Dollar Tree, Inc second quarter sales increased 12.7% and net rose 37%. 1-800 Flowers.com quarterly sales declined 4.1%. PetSmart, Inc quarterly sales increased 6% and net rose 24%.

The European indexes gained after Bundesbank raised its outlook for German GDP expansion to 3% from 1.9% in 2010. German PPI rose in July and Swiss trade surplus increased in the month. Greek industrial turnover growth slackened but new orders rose in June.

The UK indexes gained after retail sales rose in July. The UK M4 money supply increased, public sector net borrowing fell, and auto production dipped in July. The BoE noted mortgage lending still subdued. Hammerson agreed to sell 51% interest in O''Parinor to Korea-based National Pension Service.

Stocks in China rallied to a three month high led by resource companies. Revenues and profits of state-owned enterprises soar in the first seven months of the year. China allows yuan-ringgit trading as it broadens the yuan presence in Asia.

Stocks in Japan surge 1.3% and gain in a tow-day to 2% after dropping to the lows last seen in November. The benchmark index is still hovering near the two-decade low. Mazda plans to recall more than half a million cars to fix power steering flaws. The ruling party’s policy committee meets to discuss more stimulus plans.

The Sensex index in Mumbai traded at a 30-month high. SEBI requires higher derivatives disclosures for mutual funds and limits the exposure to the fund asset size. Essar Group finalizes capital plan for 9,500 mw power projects. Avantha Power plans an IPO in October.
Stocks in Australia closed nearly flat after rallying initially on upbeat earnings but worried that BHP may overpay for Potash Corp. Weekly earnings of full-time employees rises by at least 5% in the quarter ended May. BHP makes $39 billion hostile offer for Potash Corp.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.282 and fell against the Japanese yen to 85.34.

Crude oil decreased $0.97 to $74.45 a barrel for a front month contract, natural gas edged lower 7 cents to $4.17 per mBtu and gasoline decreased 3.13 cent to 192.99 cents.

Gold increased $2.00 in New York trading to close at $1,233.40 per ounce, silver decreased $0.07 to $18.35 per ounce and copper for the front month delivery decreased 3 cents to $3.34 per pound.

Yields on 10-year U.S. bonds decreased to 2.57% and on 30-year U.S. bonds yields decreased 3.66%.