Cantor Defeat and Lower Global Growth Weighs on Wall Steeet

Nichole Harper
11 Jun, 2014
New York City

U.S. stocks traded lower after rising for four days and the prospect of political gridlock rose in Washington after the U.S. House Majority Leader Eric Cantor lost to a Tea Party backed candidate.

[R]12:30 PM New York – U.S. stocks traded lower after rising for four days and the prospect of political gridlock rose in Washington after the U.S. House Majority Leader Eric Cantor lost to a Tea Party backed candidate.[/R]

Stocks on Wall Street declined after World Bank lowered its global economic growth outlook and investors turned cautious after a four-day rise and worried about rising valuations.

S&P 500 index declined 0.3% to 1,944.93 and the Nasdaq Composite Index eased 0.1% to 4,333.68.

World Bank lowered its assessment of global economic growth and lowered annual outlook for several countries including U.S., China, India, Brazil and Russia.

The U.S. controlled multilateral agency lowered its global growth outlook to 2.8% from its previous estimate of 3.2% in January.

The Washington, D.C. based bank’s estimate of world economies in the past have failed to meet expectations and the estimate generally underestimates the economic developments in Europe and developing nations.

Washington Gridlock Fears Rise

U.S. House Majority Leader Eric Cantor lost to a Tea Party-backed candidate in yesterday’s Virginia primary.

The seven-term House veteran Cantor was a staunch supporter of Wall Street and supported large financial companies and banks on the issues ranging from the 2008 Troubled Asset Relief Program and student loan privatization.

European Markets

In London trading, FTSE 100 index dropped 0.6% or 43.47 to 6,830.08 and in Frankfurt the DAX index declined 0.9% or 87.39 to 9,941.41.

In Paris, CAC 40 index slumped 0.8% or 38.49 to 4,556.51.

Lufthansa said passenger revenues in May jumped 3.9% and lowered its profit outlook. Inditex net declined 7% to €406 million and scheduled a stock split on July 15. Vallourec lowered its forecast.

CommerzBank Ag slid 0.5% to €12.44 after the Germany-based bank agreed to sell its non-performing loans in Portugal and commercial real-estate financing assets in Spain and Japan totaling €5.1 billion.

Asian Markets

Stocks in Tokyo advanced a day after trading lower and extended 14-day gain and the yen closed lower. Wholesale prices in May rose at the fastest pace in 5% on sales tax increase. Nissan is scheduled to launch its first electric vehicle in domestic market in October.

Stocks in Tokyo resumed their advance and the yen edged lower after the latest report on corporate goods price showed a slower increase in May.

Bank of Japan said domestic wholesale corporate goods prices in May rose 0.3% following a 2.8% increase in April. The prices rose the most in five years when compared to a year ago month.

Corporate Goods Price Index climbed 4.4% from a year ago month and most of the price increase was driven by a rise in sales tax in April. Excluding the sales tax impact, the price index gained 1.6% from a year ago driven by strong demand in construction sector.

The Nikkei 225 Stock Average gained 74.68 or 0.5% to 15,069.48 and the broader Topix index increased 10.34 to 1,239.07.

The Sensex Index slipped 109.80 or 0.4% to close at 25,473.89 The CNX Nifty fell 29.55 to 7,626.85.

Future Retail to raise up to Rs. 2,000 crore to reduce the debt. Indian Hotels received regulatory approvals to raise as much as Rs 1,000 crore through a rights issue. L&T plans to sell 1.6% stake in its financial services unit. SBI to consolidate several subsidiaries.

U.S. Stocks in Review

Bank of America ((BAC)) dropped 1.9% to $15.62 after a report in New York Times suggested that the U.S. Justice Department is looking to settle mortgage servicing ahead of financial crisis


CBS Corp ((CBS)) increased 1.4% or 88 cents to $62.01 and the television network plans to offer shareholders the option to exchange Class B stock of CBS for CBS Outdoor stock at 7% discount.

H&R Block Inc ((HRB)) increased 2.2% or 69 cents to $31.42 after the largest U.S. tax preparer said fiscal fourth-quarter net increased 35% on higher prices for its services and added revenues from its online

Hilton Worldwide Holdings Inc ((HLT)) declined 2.8% to $22.77 after its largest investor Blackstone is looking to trim its holding in the recently completed public offering. The stock has advanced 15% since its public listing on December 11.