Nasdaq Drops 2.5%, European Markets Decline

123jump.com Staff
09 Nov, 2007
New York City

U.S. stocks traded sharply lower on the new worries in the mortgage market. Wachovia, J P Morgan, and Bank of America were the lastest banks to report losses from the subp-rime loans. Nasdaq plunged 2.5%, Dow fell 1.7%, and S&P 500 dropped 1.43%. Techs and retail stocks fell for the second day in a row. Banks, financial services, retail, and telecom stocks fell the most. Of the S&P 500 stocks, 322 dropped and in Dow Jones 20 of the 30 stocks declined.

[R]4:00PM New York, 10:00PM Frankfurt, 8:00AM Sydney[/R]

U.S. stocks closed sharply lower on the weakness in techs and financial stocks. Wachovia set aside $1.1 billion to cover losses in the first month of this quarter. The bank had declared write down of $1.3 billion in the previous quarter ending at the end of September. Wachovia fell as much as 5% before closing down 35 cents to $40.65.

JP Morgan said that there may be further losses in leveraged loans it held totaling as much as $41 billion. JP Morgan in the third quarter wrote down $1.3 billion and reduced the valuation of the collateralized obligations by $339 million.

Bank of America warned that the fourth quarter earnings may be hurt due to the ongoing correction in the credit market. Bank of America closed up 48 cents to $43.98.

Retail stocks fell sharply on the weakness in the credit market and financial services stocks. JC Penney fell $3.38 to $46.89, Macy’s dropped $1.40 to $28.49, Target declined $2.51 to $56.19, and Wal-Mart edged lower 72 cents to $42.90.

Qualcomm ((QCOM)) lost $1.66 to close at $38.10 after reporting earnings. The news added further weakness to the tech stocks. Google, Apple, Research in Motion, Nokia, Dell, IBM, Intel, and EMC were sharply lower on the weakness in the tech sector.

[R]Global Markets Indexes[/R]

Dow Jones Industrial Average fell for the third day in a row by 223.55 or 1.69% to a close of 13,042.74, S&P 500 dropped 1.43% or 21.07 to 1,453.70, and Nasdaq Composite Index declined 68.06 or 2.52% to a close of 2,627.94. In Toronto TSX Composite lost 258.90 or 1.83% to close at 13,869.82.

Of the 30 stocks in Dow Jones Industrial Average, 10 closed higher, 20 closed lower, and none were unchanged.

IBM led the decliners for the second day in a row with a loss of 4.7% followed by declines in General Motors of 3.8%, in 3M of 3.65%, in Home Depot of 2.99%, and in Hewlett Packard of 2.3%. Merck led the gainers with a rise of 4.3% followed by increases in Citigroup of 2.8%, in AIG of 2.64%, and in American Express of 2.2%.

Of the stocks in S&P 500, 176 closed higher, 322 fell, and 2 were unchanged. Thirty six stocks fell more than 3% and thirty one stocks rose more than 3%.

Ambac Financial led the gainers in the index with a rise of 13% followed by increases in MBIA of 10.10%, in MGIC of 8.6%, in Estee Lauder of 8.45%, in Countrywide Financial of 7%, and in Sovereign Bancorp of 7%. J.C. Penney led the decliners in the index with a fall of 6.2% followed by losses in MEMC Electric of 5.3%, in Goodyear 5.2%, in Teradata of 5%, in Tiffany of 4.75%, and in Paccar of 4.45%.

Retailers fell for the second day in a row. Macy’s fell 3.71%, Limited Brands declined 3.65%, Amazon.com lost 3.6%, Target dropped 2%, and Whole Foods declined 1.5%.

In London FTSE 100 Index closed down 77.00 or 1.21% to 6,304.90, in Paris CAC 40 Index decreased 107.45 or 1.91% to close at 5,524.18, and in Frankfurt DAX index fell 7.07 or 0.09% to close at 7,812.40. In Zurich trading SMI dropped 188.08 or 2.19% to close at 8,417.15.

In Tokyo Nikkei 225 Index retreated 188.15 or 1.19% to close at 15,583.42, in Hong Kong Hang Seng index closed up 23.19 or 0.08% to 28,783.41, in Australia ASX 200 closed up 24.10 or 0.37% to close 6,545.70.

Sensex in India was closed for Diwali festival on Friday, but on Thursday fell 230.90 or 1.20% to 19,058.93. In South Korea Kospi Index increased 10.91 or 0.55% to close at 1,990.47, Thailand closed up 1.00 or 0.11% to 874.64, and Indonesia edged higher 29.44 or 1.10% to 2,707.67. Philippines added 11.56 or 0.31% to 3,703.66. Singapore declined 73.34 or 2% to 3,599.67 and Malaysia dropped 11.60 or 0.82% to 1,402.25.

In Latin Markets Argentina led the gainers with a rise of 2.26% followed by increases in Brazil of 1.19%, and in Peru of 0.55%. Mexico led the decliners with a loss of 0.45% followed by decline of 0.32% in Chile.

Bond Yields decreased on 10-year U.S. bonds to 4.21% and 30-year bonds fell to 4.60%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil gained $0.48 to close at $95.94 per barrel for a front month contract, up 45.25% for the year, natural gas increased 19 cents to $7.90 per mBtu, and gasoline futures increased 1.16 cents to close at 244.92 cents per gallon.

Gold edged lower $2.80 in New York trading to close at $834.70 per ounce, silver closed up 3 cents to $15.54 per ounce, and copper for front month delivery lost 5.85 cents to $314.55 per pound and in London trading closed down $121 to $7,189.50

Dollar edged lower against euro to $1.4674 and lower to 111.09 yen.


[R]11:00AM New York – U.S. market averages dropped sharply in the morning trading on the further weakness in sub-prime mortgage markets.[/R]

Market averages quickly declined at the opening in New York after one hour of trading on weak earnings from Qualcomm and more losses reported in the sub-prime portfolio.

September U.S. trade deficit fell 0.6% to $56.45 billion from revised $56.80 billion in August. In September, exports increased 1.1% to $140.15 billion and imports increased 0.6% to $196.60 billion. Total crude oil import in September was $20.38 billion compared to $21.73 billion.

Wachovia Bank ((WB)) said that it will take $1.1 billion in pre-tax charge due to weaker sub-prime mortgage market. Wachovia reported its exposure to mortgage backed securities to $2.1 billion and to collateralized debt was near $675 billion at the end of the October.

Wachovia fell $1.46 to $38.85 in the morning trading.

Qualcomm ((QCOMM)) reported fourth quarter revenue of $2.31 billion, up 15% from a year ago and 1% from the third quarter. Net income in the quarter increased to $1.13 billion, up 84% from a year ago and 42% from the previous quarter.

Qualcomm projected first quarter revenue to rise between 14% and 19% to between $2.3 billion and $2.4 billion and earnings per share of between 42 cents and 44 cents an increase between 11% and 16%.

Qualcomm fell 5% or $1.99 to $37.77 after the news.

European markets fell across the region led by weakness in banking stocks. The Netherlands and Switzerland led the decliners with a loss of 2.4% followed by losses in Italy of 1.9%, in Norway of 1.6%, in France of 1.4%, in UK of 1.1%.

Allianz ((AZ)) reported third quarter profit of 1.92 billion euros compared to 1.59 billion euros a year ago on revenue rise of 1.8% to 23 billion euros. Two months ago Allianz had estimated sub-prime loan exposure of 1.7 billion euro.

Barclays fell sharply on the rumors denied by the company that it has suffered losses of $10 billion in its mortgage securities portfolio. In Italy, Banca Monte Paschi dropped 9% on analyst downgrade after it acquired Banca Antonveneta.

Asian markets closed lower on weakness in banking stocks. Singapore led the decliners in the index with a loss of 2% followed by losses in Japan of 1.2%, in Shanghai of 1%, in Malaysia of 0.7%. Indonesia led the gainers with a rise of 1.10% followed by increases in Korea of 0.6%, in Australia of 0.6%, and Taiwan and Philippines of 0.4%.

Banks faced wave of selling in Tokyo after the news of losses at Mizuho Securities in the Nikkei newspaper. The report said that the proposed merger between Mizuho Securities and Shinko Securities is likely to be delayed due to the possible losses from the sub-prime securities tied to the U.S. mortgage market. The losses may exceed 100 billion yen.
Mizuho Financial Group, parent of Mizuho Securities, fell 6% and Shinko Securities declined 5.5%.

Banks in Hong Kong lowered the rates by 25 basis points to 7% lifted property stocks.

Korean stocks advanced on possible bids for Hanarotelecom from SK Telecom and Mcquarie Bank led consortium. The two telecom stocks gained on the news.

Markets in India were closed for Diwali celebration.


[R]6:00AM New York, 7:00PM Tokyo - Financial stocks and exporters drag Tokyo down 1.19%. Mizuho Securities losses in subprime securities to top 100 billion yen and may delay merger with Shinko Securities.[/R]

Japan stock averages traded in negative territory to close the week down 1.19% on lingering worries of losses associated to the U.S. subprime mortgage crisis and strengthening yen.

In Tokyo trading Nikkei fell 1.19% or 188.15 to 15,583.42, while the broader Topix Index declined 22.59 to 1,494.35.

Of the Nikkei 225 stocks 50 gained, 169 slipped, and 6 traded unchanged. Nikon Corp led advancers, rising 10% after the camera maker reported that full-year profits would beat forecasts on better sales of higher margin cameras.

Commodities gained as well on BHP Billiton’s takeover bid of Rio Tinto and sustained demand from China. Sumitomo Metal Mining rose 3.32%, Mitsubishi Corp gained 0.91%, and Mitsui & Company climbed 3.01%.

Nikkei News reported today Mizuho Securities losses in investments tied to the U.S. subprime mortgage market may be as high as 100 billion yen jeopardizing the merger with Shinko Securities.

The yen continued to firm against the dollar and was quoted at 112.53 from 112.55 and at 165.55 from 165.57 against the euro.

Of the Nikkei 225 index shares, Nikon Corp led the advancers, gaining 10%, followed by rises of 6.43% in Isetan, 4.51% in Mitsumi Electric Company, 4.42% in Toray Industries, and 3.42% in Mitsukoshi.

Nikon rose after the company announced the full- year sales and profit will beat targets because of rising demand of pricier models.

Dowa Holdings Company led the decliners in the index with a fall of 16.89%, followed by losses in Alps Electric Company Limited of 11.02%, in Trend Micro Inc of 10.44%, in Okuma Corp of 8.13%, and in Fujikura Limited of 6.82%.

Dowa Holdings fell after reporting yesterday net income had plummeted 13%.

Financial stocks also declined as worries of losses related to subprime investments maintained their grip on investor sentiment and Nikkei reports that Mizuho Securities subprime losses could soar to 100 billion yen. Mitsubishi UFJ Financial Group shed 4.76%, Mizuho Financial Group slumped 5.68%, and Sumitomo Mitsui Financial Group plunged 5.90%.

Exporters also were on the downtrend as the yen continued to rise against the dollar. Furthermore Lehman Brother reported that the yen could further strengthen to 100 against the dollar by the end of 2008, while Deutsche Bank forecasted that the yen could spike as much as 97.5 to the dollar. Sony Corp retreated 0.74%, Hitachi Limited climbed down 3.69% and Komatsu declined 0.86%.

Elpida Memory is mulling forging an alliance with Nanya Technology Corporation or ProMos Technologies Inc in order to challenge Samsung Electronics. Sakamoto, the chief executive of Elpida said such an alliance will help in boosting production at the same time cutting costs, adding that prices of chips may recover in April as stockpiles fall, according to a report by Bloomberg news.

Nippon Telegraph and Telephone Corp said first half profits dropped 33% as net income fell from 291.5 billion yen to 195.2 billion yen, weighed down by a loss of customers at NTT DoCoMo. Sales fell 1.2% to 5.19 trillion yen. The mobile phone unit recently reported half profits declined 20% as price cuts failed to deter customers from switching to rivals. First half profits at NTT DoCoMo slipped 18% to 564 billion yen. The company closed 4% lower.