U.S. Banks Lead Decliners, Home Builders Shine

123jump.com Staff
17 Jul, 2009
New York City

U.S. stocks edged down with banks leading the decliners and home builders the gainers. Bank of America set aside higher reserves to account of rising losses in mortgage and personal loans. IBM surged on earnings. Commodities rallied after housing starts rebounded.

[R]4:00 PM New York, 9:00 PM London, 6:00 AM Sydney – U.S. stocks edged down with banks leading the decliners and home builders the gainers. Bank of America set aside higher reserves to account of rising losses in mortgage and personal loans. IBM surged on earnings. Commodities rallied after housing starts rebounded.[/R]

In a quiet trading day in New York, banks led decliners and home builders led the gainers.

Investors and small businesses are bracing for another wave of bankruptcies after the troubled lender CIT struggles to pay many of its clients. CIT collapse or a prolonged restructuring may affect between 600,000 and one million small businesses in the U.S. The Federal Reserve and U.S. Treasury have refused additional lending to the struggling lender and banks are likely to provide rescue funding under debtor-in-possession.

CIT rebounded as the company and its creditors are in advanced stages of discussion to avert bankruptcy filing. A.O. Smith increased after earnings surged. Bank of American earnings declined 25%. Citigroup returned to profitability. General Electric revenues and earnings declined.

The U.S. housing starts increased 3.6% in June to annual rate of 582,000 surprising the bond market.

British Airways after denying for months it needs additional capital raised £600 million to cover the mounting losses. Miners closed higher after the rise in copper and other base metal prices. In the third year, more shareholders voted against the controversial bonus plan at Cable & Wireless.

The second largest UK flooring retailer, Allied Carpets in a pre-packaged deal under voluntary administration reemerged with fewer stores and new lead investor. The fate of the 166 of the 217 stores with 1,100 employees is uncertain, even though the restructuring administrator indicated optimistic outcome.

Japanese investors focused on domestic stocks after the prospect global recovery looks dim in the near term. Real estate and retail stocks closed up. Consumer lenders Aiful and Promise dropped on the worries that opposition party DPJ may curb lending practices.

Investors in Hong Kong and Shanghai took optimistic views on the earnings after China estimated second quarter economic expansion at 7.9%. Your-Mart initial public offering in Shenzhen Stock Exchange surged 94% following in the footsteps of two other IPOs last week.

Stocks in Mumbai surged after the government suggested that it will reform financial services industry to attract more investors in the infrastructure development and insurance industry. Air India will receive $510 million in equity infusion from the government.

Stocks in Australia closed higher as metals and media stocks edged up. The price indexes for exports and imports declined by record amounts since the data have been collected in 1974. Macquarie Countrywide Trust surged 20% after it sold its 75% stake in a portfolio of U.S. properties.

North American Markets

Dow Jones Industrial Average increased 32.12 or 0.4% to a close of 8,743.94, S&P 500 Index decreased 0.36 or 0.04% to 940.38, and Nasdaq Composite Index edged higher 1.58 or 0.08% to close at 1,886.61. Toronto TSX Composite Index increased 65.00 or 0.6% to 10,369.42.

Of the stocks in S&P 500 index, 209 increased, 284 declined and 7 were unchanged.

Marshall & Ilsley led the decliners in the S&P 500 index with a loss of 12.3% followed by losses in Kimco Realty of 10.6%, in Zions Bancorp of 6.8%, in BB&T Corp of 6.2% and in General Electric of 6.1%.

CIT Group Inc led gainers in the S&P 500 index with a rise of 70.7% followed by gains in Mattel Inc 7.6%, in AIG of 6.1% and Gannett Company of 4.8%. IBM, KB Home and Harman International added more than 4%.

South American Markets Indexes

Mexico Bolsa Index increased 6.40 or 0.02% to 25,741.96. Brazil Bovespa Stock Index added 154.29 or 0.3% to 52,072.49.

Argentina Merval Index decreased 0.2%. Chile Stock Market Select index edged lower 0.07%, Peru Lima General Index decreased 0.01% and Colombia IGBC General Index added 1.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 26.91 or 0.62% to 4,388.75, in Paris CAC 40 Index increased 18.78 or 0.59% to close at 3,218.46 and in Frankfurt DAX index higher 21.21 or 0.43% to close at 4,978.40. In Zurich trading SMI increased 55.57 or 1.00% to close at 5,594.14.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 51.16 or 0.55% to 9,395.32, Hang Seng index in Hong Kong increased 443.79 or 2.42% to 18,805.66 and CSI 300 index in China higher 18.57 or 0.53% to 3,519.81. ASX 200 index in Australia increased 5.20 or 0.13% to 4,000.80. The FTSE Bursa KL Composite index in Malaysia closed higher 12.02 or 1.08% to 1,120.90.

The Kospi Index in South Korea increased 7.88 or 0.55% to close at 1,440.10. SET index in Thailand closed higher 13.37 or 2.29% to 596.11 and JSE Index in Indonesia decreased 11.60 or 0.55% to 2,106.35. The Sensex index in India increased 494.67 or 3.47% to 14,744.92.


Commodities, Metals, and Currencies

Crude oil increased $1.38 to close at $63.40 a barrel for a front month contract, natural gas increased 0.02 cents to $3.68 per mBtu and gasoline increased 5.15 cents to 176.50 cents.

Wheat futures closed up 8.50 cents in Chicago trading to $5.41 a bushel. Sugar decreased 0.09 cent in trading at 17.30 cents a pound. Soybean future closed up 33.50 cent to $9.23 a bushel.

Gold increased $2.10 in New York trading to close at $937.50 per ounce, silver closed up $0.17 to $13.40 per ounce and copper for the front month delivery increased 3.25 cents to $2.42 per pound.

Dollar edged lower against euro to $1.4102 and closed down against the Japanese yen to 94.19.

Yield on 10-year U.S. bond increased to 3.64% and with 30-year maturities decreased to 4.54%.