Wall Street in 3% Weekly Loss, Euro Zone Ratings on Watch List

Bikram Pandey
16 Dec, 2011
New York City

U.S. stocks traded sideways as investors weighed positive economic news with the debt rating downgrades of banks. A ratings agency placed France and six other euro zone nations on a negative outlook. The U.S. House passed a $1 trillion spending bill to avert a U.S. government shutdown.

[R]4:15 PM New York – U.S. stocks traded sideways as investors weighed positive economic news with the debt rating downgrades of banks. A ratings agency placed France and six other euro zone nations on a negative outlook. The U.S. House passed a $1 trillion spending bill to avert a U.S. government shutdown.[/R]

U.S. stocks advanced after latest read on the inflation was lower than expected and contributed to a stream of positive economic news in recent days. Investors weighed the U.S. economic news with the cautionary views on the European nations.

In the late afternoon, Fitch Ratings reaffirmed the AAA debt rating of France and changed its outlook on France negative. Fitch also placed Belgium, Cyprus, Ireland, Italy, Spain and Slovenia on a negative watch list review that it plans to complete by the end of January.

Fitch said it placed France on a negative rating list because of the “heightened risk of contingent liabilities” that may arise from the widening debt contagion in the region.

For the week, the Nasdaq declined 3.5% and the S&P 500 index fell 2.8%. Bank stocks were in focus after another rating downgrade cut the debt rating of banks Goldman Sachs, Bank of America and Credit Suisse.

Zynga, the online game developer declined 5% after it priced its public offering of 100 million shares and raised $1 billion and in trading more than 114 million shares changed hands.

In earnings news, Research in Motion declined after it announced product delays. Accenture fell after it cut its annual earnings outlook and Adobe Systems gained on better than expected views.

European markets closed mixed and bonds yields of Italy and Spain were on the decline. Italy’s lower house of parliament approved the €30 billion austerity measures. Airbus said that the plane maker is in on target to deliver more superjumbos in 2012.

Stocks in Japan closed higher tracking rising markets in New York and in Europe. Commodities linked companies gained and banks closed mixed. Nexon, the online gaming company declined for the third day in a row after it completed the largest public offering in Japan and raised $1.2 billion.

Australian stocks rebounded after extending losses for three days in a row. Resources led companies and banks were among the leading gainers. ANZ said at the annual general meeting that it has enough capital to withstand the euro zone. Insurance Australia Group agreed to buy New Zealand based general insurance from AMI for NZ$380 million.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond decreased to 1.85% and 30-year bond inched down to 2.86%.

The U.S. dollar edged up 0.1% to $1.303 to one euro and traded lower against the Japanese yen to 77.83.

Immediate delivery futures of Texas crude oil increased $0.20 to $94.07 a barrel and futures of natural gas gained 0.1 cent to $3.13 per mbtu and gasoline price added 1.7 cents to 250.50 cents a gallon.

In metals trading, copper increased 8.6 cents to $3.35 per pound, gold gained $19.10 to $1,596.30 per ounce and silver rose $0.22 to $29.50.