U.S. Indexes Drop 2%; Europe Faces More Sovereign Debt Stress

Bikram Pandey
02 Sep, 2011
New York City

The U.S. indexes declined more than 2.6% after payroll report. August unemployment rate was unchanged at 9.1% and most sectors trimmed jobs in the month. Oil declined more than 2% and gold gained 3%. Nearly after four years, the U.S. set to sue banks for misleading investors in mortgage securities.

[R]4:10 PM New York – The U.S. indexes declined more than 2.6% after the payrolls report. August jobless rate was unchanged at 9.1% and most sectors trimmed jobs in the month. Oil declined more than 2% and gold gained 3%. Nearly after four years, the U.S. is set to sue banks for misleading investors in mortgage securities.[/R]

U.S. indexes fell after non-farm payroll level stagnated in August and unemployment rate was stable at 9.1%. Long term unemployed, those searching for jobs for more than 27 weeks or more, were unchanged at 6 million.

In a separate survey of households, the number of employed increased 331,000 and part time workers in the month increased 430,000. Government payrolls declined 17,000 and private sector payrolls increased by the same.

The economy added fewer than expected jobs and most sectors lost jobs in the month. Manufacturing sector trimmed 3,000 and retail sector lost 8,000 in the month. Healthcare sector added 29,700 jobs and construction payrolls fell 5,000.

The Office Management and Budget, the White House agency lowered U.S. deficit estimate by 20% to $1.316 trillion.

The U.S. domestic auto makers retained the upper hand for the third month in a row in August. Sales at Chrysler surged 30.6%, at Ford increased 11% and at GM jumped 18%. Nissan sales rose after it returned to normal production in Japan. Honda and Toyota struggled with production.

NextEra agreed to sell natural gas-fired power assets for $1 billion.

The European market indexes decline more than 2%. Talks between Greece and international lenders suspended after disagreement over budget cuts. Shell agreed to sell stake in gas transport system to Infragas Norge AS for $730 million. Peugeot plans to invest €650 million in India.

Euro area zone producer prices increased but Czech retail sales fell in July. Spanish unemployment and export price inflation rose in August. Hungary trade surplus narrowed in June.

The UK indexes extended losses after construction activity slid to an eight-month low in August and orders declined in the second quarter. Smiths Interconnect acquired Power Holdings for $235 million. LSE confirmed takeover talks with LCH.Clearnet.

The Nikkei index declined 1.2% on Friday and advanced 1.7% and gained for the second week. Capital spending in the quarter to June declined 7.8% from a year ago. Automakers declined after Toyota and Honda reported lower sales in the U.S.

The Australian benchmark index dropped 1.5% on Friday and gained 1% in the week. SABMiller turn up heat on Foster’s and questioned company’s outlook in a regulatory filing. Qantas Group reported improved July performance on the success of its discount carrier Jetstar.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield decreased to 2.02% and 30-year U.S. bond fell to 3.32%.

The U.S. dollar increased at $1.418 to one euro and closed lower against the Japanese yen to 76.73 yen.

Immediate delivery futures of Texas crude oil decreased $2.82 to $86.11 a barrel and futures of natural gas decreased 0.14 cents to $3.906 per mbtu and gasoline price decreased 6.48 cents to 282.75 cents a gallon.

In metals trading, copper decreased 3.8 cents to $4.12 per pound, gold increased $48.20 to $1,877.30 per ounce and silver increased $1.75 to $43.29.