S&P 500 Drops 1%, Fannie and Freddie Plunge 30%

Nichole Harper
01 Oct, 2014
New York City

U.S. stocks traded sharply lower after Hong Kong braced for more protests and Italy forecasted economic contraction in the current year. Fannie Mae and Freddie Mac plunged after a court ruling. GM and Chrysler September sales rise 19% and Ford sales fall 3%.

[R]1:10 PM New York – U.S. stocks traded sharply lower after Hong Kong braced for more protests and Italy forecasted economic contraction in the current year. Fannie Mae and Freddie Mac plunged after a court ruling. GM and Chrysler September sales rise 19% and Ford sales fall 3%.[/R]

Market indexes declined at the opening and struggled to advance after geopolitical worries and growing economic growth worries in Europe.

U.S. private businesses expanded payrolls by 213,000 in September, a monthly increase for the sixth month in a row, according to a private survey.

Private employers expanded payrolls after adding 202,000 jobs in August, according to payroll processor ADP.

Italian government said gross domestic product is expected to shrink 0.3% compared to estimate of 0.8% increase in April.

Separately, France government is not likely to meet its target of lowering budget deficit to 3% limit set by the European Union until 2017. The news was reported by Les Echos.

Tollbooth Index dropped 0.7% or 60.94 to 9,228.06.

S&P 500 index dropped 0.7% or 13.55 to 1,958.59 and Nasdaq Composite declined 1% or 42.41 to 4,450.61.

U.S. Stocks

General Motors Company ((GM)) jumped 2.7% or 85 cents to $32.79 after the automobile company said sales in the September climbed 19% to 223,437 vehicles from a year ago.

Ford Motor Company ((F)) declined 1.2% or 18 cents to $14.61 after the automobile producer reported U.S. sales in September fell 3% to 180,175 vehicles from a year ago. Retail sales increased 2% to 137,297 vehicles, best monthly sales in seven years.

Chrysler Group LLC, the third largest domestic auto maker said U.S. sales soared 19% to 169,890 units from 143,017 units a year ago month, the group’s best September sales since 2005. Total car sales declined 7% to 39,440 units.

Fannie Mae and Freddie Mac plunged more than 30% after a court ruling that rejected a claim from investors that the company allegedly failed to meet contractual agreement to share dividends and profits.

U.S. District Judge Royce Lamberth rejected their claims and said under 2012 amendment allowed the companies to sweep “nearly all” profits from Fannie and Freddie to the U.S. Treasury.

European Markets

In London trading, FTSE 100 index dropped 1.1% or 71.20 to 6,551.52 and in Frankfurt the DAX index slipped 0.9% or 87.51 to 9,386.79.

In Paris, CAC 40 index declined 1.2% or 51.90 to 4,364.34.

adidas AG gained 1.9% to €60.35 after the Germany-based sports footwear, apparel and accessories maker announced a three-year share buyback plan worth €1.5 billion or $1.9 billion that will end by 2017.

The bonds will have a 7-year and a 12-year term, respectively. The bonds will be listed on the Luxemburg Stock Exchange, and have denominations of €1,000 a share.

J Sainsbury Plc plunged 6.5% to 235.10 pence after the U.K.-based grocery retailer said total retail sales for second-quarter dropped 0.8% excluding fuel and 2.3% including fuel. Comparable store sales in the quarter declined 2.8%, the third consecutive quarterly fall.

Asian Markets

Stocks in Japan declined and large manufacturers’ confidence index in July increased and the yen eased again.

Companies in the survey indicated that they are likely to increase capital expenditure by 8.6% in the financial year ending in March.

Tankan index for large manufacturers rose to 13 in July from 12 in June, the Bank of Japan said today.

The Nikkei 225 Stock Average dropped 91.27 or 0.6% to 16,082.25 and the broader Topix index fell 8.08 to 1,318.21.

The yen traded at 109.80 against one U.S. dollar.

In Mumbai, the Sensex Index slipped 62.52 or 0.2% to close at 26,567.99 The CNX Nifty fell 19.25 to 7,945.55.

Vehicle sales increase more than expected in September. Auto and motor cycles sales were ahead of expectations after vehicle makers offered more incentives to revive sales.

Bajaj Auto sales in September climbed 9% and commercial vehicles sales and export surged 19%. Hero MotoCorp sales soared 30% to 558,609 units.

The largest auto maker, Maruti Suzuki September sales jumped 5% and domestic sales soared 10% but export plunged 28%.