S&P 500 Index Drops 2.5%, Gains 11% in October; World Markets Slide

Bikram Pandey
31 Oct, 2011
New York City

U.S. indexes dropped 2% and finished the October with the best monthly gains in more than a decade. MF Global sought bankruptcy protection in a New York court after it lost bests on European sovereign bonds. Financials dropped and commodities turned lower.

[R]4:00 PM New York – U.S. indexes dropped 2% and finished the October with the best monthly gains in more than a decade. MF Global sought bankruptcy protection in a New York court after it lost bests on European sovereign bonds. Financials dropped and commodities turned lower.[/R]

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 dropped more than 2% today but managed to surge 11.2% and the Nasdaq index declined 1.6% today and soared 11.5% in the month.

MF Global filed for bankruptcy protection after the deal with Interactive Brokers fell apart. The securities broker is the first casualty in the U.S. from the collapse in the sovereign bonds in Europe. MF Global was one of the 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York.

In a New York court filing, MF Global listed $39.7 billion in liabilities and $41 billion in assets and the board of directors authorized the Chapter 11 filing to “protect their assets” according to a company statement.

In the U.S. earnings news, AbitibiBowater third quarter net loss narrowed to $44 million. Healthcare insurer Humana said third quarter net increased 13.1% to $444.8 million and the conglomerate Loews third quarter net soared to $162 million. China based online media site operator Sohu.com said third quarter net increased 17% to $46.8 million.

European indexes edged lower and yields on Italian and Spanish bonds gained and Belgium completed the sale of €2.2 billion bonds at higher yields. Bank of Spain said economic growth grounded to a halt in the third quarter and Spain is likely to miss its deficit target this year. Credit Suisse Group announced job cuts of 1,000.

Finance ministry in Japan intervened in the currency market and propped up the yen by 4%. The yen had traded near its 25-year high. Stocks declined and investors surmised the intervention will not sustain the weaker yen. Ebara Corp plunged 11% and Mitsui OSK dropped 4% on weak earnings outlooks.

Australian stocks closed lower on the last day of October and but gained 7.1% in the month. October month gain was the best since July 2009. Banks led the decliners and resource stocks closed mixed. Qantas resumed flight operations after an order from labor tribunal and expects to catch near normal schedule by Wednesday.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond closed down to 2.13% and 30-year bond declined to 3.15%.

The U.S. dollar gained to $1.38 to one euro and closed lower against the Japanese yen to 78.16 yen after Japanese finance ministry intervened.

Immediate delivery futures of Texas crude oil decreased $0.40 to $92.92 a barrel and futures of natural gas increased 1 cent to $3.93 per mbtu and gasoline prices fell 3.93 cents to 264.25 cents a gallon.

In metals trading, copper decreased 7.20 cents to $3.63 per pound, gold fell $24.60 to $1,722.60 per ounce and silver declined 81 cents to $34.47.