U.S. Indexes Decline; Strength in Holiday Sales, Euro Worries

Bikram Pandey
29 Nov, 2010
New York City

Market indexes in New York dropped more than 1% tracking losses in Europe. The European nations agreed to lend

[R]10:30 AM New York – Market indexes in New York dropped more than 1% tracking losses in Europe. The European nations agreed to lend €85 billion to Ireland, the second nation to seek help and hoped that the debt contagion will be forestalled. Euro declined and banks fell. Holiday shopping data lifted retailers.[/R]

Markets in New York and in Europe were on the edge as the euro-zone debt crisis persists. Indexes in New York opened lower tracking losses in Europe as investors worried that the Irish bailout may not prevent the contagion spreading further.

The Dow, the S&P 500 index and the Nasdaq fell more than 1% tracking losses of 2% in Germany, France and Italy.

The euro rose in the morning trading but declined in New York and in late trading in Frankfurt as investors face uncertain prospects related to debt contagion. Gold declined $3.70 to $1,360 and the oil hovered near $83.92 a barrel.

Regulators and bankers rushed on late Sunday night to hammer out the details of Ireland bailout package that has left many with more questions.

The European Union and the IMF agreed to a bailout of €85 billion or $113 billion to Ireland as it seeks capital to support its failing banking system.

Ireland agreed to pay 5.75% interest rate and Germany was seeking rates as high as 7.5% according to the sources in the European Central Bank.

Holiday sales surged 6.4% in the Thanksgiving weekend as retailers draw more than 210 million shoppers in stores and on-line.

The data published by the National Retail Federation indicated that shoppers spent $45 billion or an average $363.54 and online purchases rose to one third of all sales.

The retail industry group in a conference call on Sunday predicted sales in the holiday season to increase 2.3% to $447.1 billion, after rising a mere 0.4% in 2009 and dropping 3.9% in 2008.

Retailers are hoping that Cyber Monday sales will draw as many as 110 million people online as retailers offer their best discounts today. The Cyber Monday has increasingly become important in the last seven years as shoppers avoid crowds and search for deeper discounts online.

Amazon.com and Abercrombie & Fitch traded up more than 1% after better than expected Thanksgiving holiday sales.

Hewlett Packard Co declined more than 1.4% after the company was sued by shareholders seeking more information about the ouster of the former chief executive Mark Hurd.

European banks fell sharply after investors worried that future bailout may spread the costs to bond holder and banks. Societe Generale, BNP Paribas and Deutchse Bank fell more than 3%.