U.S. Indexes Lower After Stocks in China and Asia Plunge

Bikram Pandey
12 Nov, 2010
New York City

U.S. stocks traded lower after markets in Asia plunged and European indexes traded lower. G20 nations meeting failed to produce clear guidelines to set right or tackle rising global financial and trade imbalances. J.C. Penney reported better higher profit.

[R]11:00 AM New York – U.S. stocks traded lower after markets in Asia plunged and European indexes traded lower. G20 nations meeting failed to produce clear guidelines to set right or tackle rising global financial and trade imbalances. J.C. Penney reported better higher profit.[/R]

World leaders after a meeting of G20 nations issued a statement that highlighted the division between consuming nations and emerging nations.

The weak statement lacking in details and prepared after much haggling only highlights broader issues related to trade and financial flows and does not identify the root causes of the imbalances and is silent on any corrective actions.

Consumer sentiment index increased to 69.3 in November from 67.7 in October and rose to the highest level since June. The index tracked by the Reuters/University of Michigan is estimated to increase to around 69 by several economists.

According to preliminary estimate, third quarter gross domestic product in the euro-area and wider zone of 27 nations rose 0.4% compared to previous quarter. Seasonally adjusted GDP rose 1.9% from a year ago quarter in the euro-area and 2.1% in the EU27.

Industrial output in 16-nations euro zone decreased 0.9% and in the wider zone of EU 27 fell 0.5% in September from previous month and rose 5.2% in the euro area and 5.8% in the EU 27 from a year ago.

Stocks in Tokyo declined after rising for two days and banks declined. Sumitomo Mitsui Financial and Mizuho Financial revised annual earnings outlook. Mizuho also agreed to take 2% stake in the U.S. based asset manager BlackRock.

Stocks in China plunged on the worries that accelerating inflation will spark another round of bank tightening. The benchmark indexes in Shanghai plunged more than 5%. Hong Kong reported third quarter economic growth at 6.8%.

Stock Movers

J.C. Penney Co. said third quarter profit increased 63% to $44 million from $27 million and earnings per share increased to 19 cents from 11 cents a share on flat sales of $4.19 billion.

Mizuho Financial said in its statement it agreed to buy 2% stake in BlackRock Inc for $500 million. Mizuho noted that it will acquire 3.07 million shares of which 2.45 million will be purchased from Bank of America and the rest from the offering managed by the company.

Nvidia Corp increased 7% after the company reported third quarter adjusted exceeded analysts’ expectations.

Wendy’s/Arby’s Group Inc declined 6% after fast foods chain operator said its adjusted earnings at the low end of its previous estimate and lower.