Banks Drag U.S. Stocks Lower; Metals, Oil Fall

Bikram Pandey
19 Oct, 2010
New York City

Stocks fell sharply on Wall Street after earnings jitters and mortgage bonds worries. Banks may be forced to pay for failed or depressed mortgages and bond holders demand higher accountability. Apple fell on earnings outlook and IBM fell after services revenues fell in the quarter.

[R]4:00 PM New York – Stocks fell sharply on Wall Street after earnings jitters and mortgage bonds worries. Banks may be forced to pay for failed or depressed mortgages and bond holders demand higher accountability. Apple fell on earnings outlook and IBM fell after services revenues fell in the quarter. Goldman Sachs reported higher than expected earnings.[/R]

U.S. stocks fell sharply as investors increasingly fear that banks may be forced to buy severely depressed mortgages and continued uncertainty in the housing market. In addition, Apple estimated lower than expected earnings in the current quarter and IBM noted services revenues lagged expectations.

China raised its key interest rates by 25 basis points. U.S. housing starts rose 0.3% to 610,000 in September and home builder confidence improved in October. Sweden-based SKF agreed to buy U.S.-based Lincoln Industrial for $1 billion.

Apple Inc declined and quarterly sales and net soared. Capital One Financial Corp said its quarterly net more than doubled. IBM quarterly net increased 12%. Bank of America quarterly loss widened.

Japanese stocks rebounded Tuesday on earnings outlook and a pause in yen’s strength. The government cuts its view of the economy. Okinawa Electric Power Co starts smart grid control of renewable electric supply. Business sentiment remains grim in October. China plans to reduce rare earth mineral export further next year.

Stocks in China surged on the expectations of sustained economic growth in the next five years and HK stocks edged higher after the U.S. dollar traded higher. China’s U.S. Treasury holdings rise in August for the second month. China plans to restrict exports of rare earth minerals.

Larsen & Toubro and Bajaj Auto reported sharply higher earnings. Adani Enterprises is looking to invest $6.9 billion in Australia projects. Biocon gained after it finalized an agreement with Pfizer to sell its insulin products. ING Vysya Bank Limited said quarterly net soared 40%.

Australian shares pared its weak start to this week but stayed little changed and the Australian dollar hovered near the parity with the U.S. dollar. Construction industry survey highlighted worker shortage. Australia reduces U.S. Treasury holdings in August by 25%.

Commodities, Bonds and Currencies

Yields on 10-year bond decreased to 2.47% and on 30-year bonds declined to 3.90%.

The U.S. dollar advanced to $1.37 to a euro and rose against the Japanese yen to 81.55 yen.

Immediate futures prices of Texas crude oil decreased $3.61 to $79.47 a barrel, for natural gas added 0.08 cents to $3.51 per mbtu and gasoline prices decreased 10.90 cents to 204.25 cents a gallon.

In metals trading, copper prices decreased 12.25 cents to $3.72 per pound, gold decreased $42.10 to $1,330.00 per ounce and silver fell 94 cents to $23.46.