S&P 500 Index Down Over 3% in Worldwide Plunge; HP Selects Whitman

Bikram Pandey
22 Sep, 2011
New York City

The selling pressure gripped world markets with the U.S. indexes extending losses for the second day in a row and falling more than 3%. Investors were underwhelmed by the talks of appointing Meg Whitman as the next Hewlett Packard chief executive.

[R]4:00 PM New York – The selling pressure gripped world markets with the U.S. indexes extending losses for the second day in a row and falling more than 3%. Investors were underwhelmed by the talks of appointing Meg Whitman as the next Hewlett Packard chief executive.[/R]

U.S. indexes dropped more than 3% for the second day in a row and 10-year Treasury note yield dropped to historic low of 1.72%.

Market indexes in New York extended losses on the rising fears of recession and a growing consensus that neither the U.S. politicians can devise new fiscal stimulus nor the Federal Reserve can deliver new monetary stimulus.

The news from the euro zone is equally bleak with the widening sovereign debt fears contagion and the slowing economies of China and India.

In New York trading, Copper declined 8.6%, silver plunged 11.2% and gold decreased 3.8%.

In corporate earnings, Bed Bath & Beyond Inc’s second quarter net earnings increased to $229.4 million. FedEx first quarter net income soared 22% to $464 million but trimmed its current quarter and full year earnings.

Goodrich agreed to be acquired by United Technologies for $18.4 billion.

Hewlett Packard named Meg Whitman as the next permanent chief executive of the company. The company’s board has come under heavy pressure after years of mediocre oversight and falling market value.

Investors questioned if Whitman is the right candidate for a company that is looking to transition to service revenue model. And several investors called for the ouster of the most of board members who have delivered very little in the last eight years.

European market indexes dropped to 26-month low after the batch of latest economic data pointed more weakness. The euro zone private growth declined in September with the grim outlook for the rest of the year.

Greece offered more spending cuts and Italy lowered economic outlook till 2013 as German private sector growth nearly halts. Spain home loans fell to a record low in eight years but tourist arrivals surged in August.

In Asia, stocks in Tokyo edged lower as markets in the region declined after the U.S. Fed action was less than expected. The banks led the decliners after the European risk monitoring agency cited rising risks to financial system. Softbank dropped 12% after it lost its exclusive rights to sell iPhone in Japan.

Market index in India dropped 4.1% and the rupee touched to a low last seen two years ago as foreign investors begin repatriating capital and international lenders delay the roll of loans to private corporations.

Australian markets plunged following a worldwide sell off sparked by the U.S. Fed action to lower long term rates. The Fed move fell short of market expectations and indexes in Japan, India, Hong Kong and China dropped sharply.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield closed dropped to historic low of 1.72% and 30-year U.S. bond decreased to 2.79%.

The U.S. dollar increased to $1.3481 to one euro and closed lower against the Japanese yen to 76.33 yen.

Immediate delivery futures of Texas crude oil decreased $5.57 to $80.35 a barrel and futures of natural gas decreased 0.01 cents to $3.72 per mbtu and gasoline price fell 10.85 cents to 255.80 cents a gallon.

In metals trading, copper decreased 32.45 cents to $3.43 per pound, gold plunged $68.90 to $1,739.20 per ounce and silver dropped $4.59 to $35.92.