U.S. Indexes Head Lower; MF Global Files Bankruptcy

Nichole Harper
31 Oct, 2011
New York City

U.S. stocks trended lower on the last trading day of October and indexes soared more than 11% in the month. The S&P 500 index gained 11.8% and the Nasdaq index added 11.9% in the month. MF Global filed for bankruptcy protection after the deal with Interactive Brokers fell apart.

[R]1:00 PM New York – U.S. stocks trended lower on the last trading day of October and indexes soared more than 11% in the month. The S&P 500 index gained 11.8% and the Nasdaq index added 11.9% in the month. MF Global filed for bankruptcy protection after the deal with Interactive Brokers fell apart.[/R]

U.S. stocks edged lower on the last day of trading this month. World markets surged in October after six weeks of volatility and registered the best monthly gain in two years.

The S&P 500 index declined 1.6% to 1,264.86 but added 11.8% in the month and traded in the positive territory after two months of declines.

The Nasdaq index declined 1.3% to 2,702.42 and rose 11.9% in October and jumped 1.9% in the year after beginning a steep descent in the third week in July that ended on October 3.

European markets declined on the first day of trading on the worries that implementation of bank recapitalization plan may tougher than expected. Credit Suisse Group announced 1,000 jobs elimination and the yields on Spanish and Italian bonds increased.

The Organization for Economic Cooperation and Development revised its outlook lower for the economy in the European region. The economic growth estimate for the year 2012 was lowered to 0.3% from the previous estimate of 2%. The growth in the current year is estimated at 1.6%.

The statistics agency of the European region, eurostat said inflation in the 17-member euro zone was steady at 3%, higher the target set by the European Central Bank. Italian inflation jumped to 3.8% from 3.6%.

Unemployment in the region increased to 10.2% in September from 10.1% in August. Outlook for the labor market does not look bright. Spain led the unemployment rate in the region with 22.6% followed by 17.6% in Greece. Italian unemployment increased to 8.3% from 8% after the increased in value added tax.

Japan Intervenes in Currency Market

Japan intervened in the currency market to weaken the yen. Finance ministry carried out a repeated market intervention that dragged the yen against the dollar and the euro in a move that was similar to last action on August 4.

The yen declined 4% to 79.01 against one dollar and traded as low as 75.35 before the market intervention in the morning today.

Finance Minister Jun Azumi in noted the aggressive stance in the market today and added, “I have repeatedly said that we will take bold action against speculative moves in the market. I will continue to intervene until I am satisfied.”

Stock Movers

Credit Suisse Group AG declined 3.7% to $29.72 in New York trading after the Swiss investment bank and broker said it will eliminate 1,000 additional jobs according to a Swiss newspaper report.

The daily news paper Tages-Anzeiger said that the cuts will be in the investment banking unit in the U.S. and in London and at its wealth management unit. Two independent sources in New York and London confirmed the internal memo.

Earlier in July the Swiss bank cut 2,000 jobs to lower its operating cost by Sfr 1 billion and meet revised capital reserve requirements.

Humana Inc. ((HUM)) increased 6.9% or $5.56 to $85.86 after the health insurance benefit provider reported third quarter revenue rose 11.4% to $9.30 billion from $8.35 billion in the previous year. Net income in the quarter increased 13.1% to $444.8 million or $2.67 per diluted share compared to $393.2 million or $2.32 per share reported a year ago.

Sohu.com Inc. ((SOHU)) decreased 11.2% or $7.75 to $61.25 after the china based online media company reported third quarter total revenues soared 42% to $232.9 million from $164.1 million in the previous year. Net income in the quarter increased 17% to $46.8 million or $1.17 per diluted share compared to $41.0 million or $1.01 per share reported a year ago earlier.

Loews Corporation ((L)) slipped 2.3% or 98 cents to $40.30 after the property and casualty insurer reported third quarter total revenues fell to $3.44 billion from $3.70 billion in the previous year. Net income in the quarter soared to $162 million or 40 cents per diluted share compared to $36 million or 9 cents per share reported a year ago.