Credit Market Worries Drag U.S. Stocks

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

U.S. stocks declined in the afternoon trading on the credit market worries and uncertainty in the holiday retail sales. UBS analyst downgraded Fannie Mae and Freddie Mac and managed to drag financial services agreement. HSBC is forced to support structured investment vehicles that it has sold and move the assets on to its balance sheet. Oil traded at the elevated level and gold inched higher.

[R]1:30PM New York – U.S. market averages fell after investors focused on the credit market worries and holiday sales.[/R]

Dow Jones Industrial Average fell 27 to 12,954, Nasdaq declined 9 to 2,587, and S&P 500 lost 7 to 1,433.

Credit market worries and jitters related to housing market, and uncertainty related to holiday retail sales kept the U.S. averages in check.

Fannie Mae and Freddie Mac fell 7% after a downgrade from UBS analyst, E*Trade fell another 10% after a report in the Wall Street Journal raised questions on the quality of the mortgage portfolio. Citigroup, Bear Stearns, Goldman Sachs, and Lehman Brothers fell between 3% and 4% after the credit market worries dragged financial services companies.

Target ((TGT)) fell 3% or $1.40 to $55.77, Nordstrom declined 21 cents to $35.51, Wal-Mart lost 22 cents to $45.52, and Macy’s edged lower $1.02 to $29.00.

European markets in the region edged higher after the U.S. markets opened. Norway led the region with a rise of 1.4% followed by increases in Spain, the Netherlands, and Switzerland of 0.3%. Italy led the region with a fall of 0.4% followed by decline of 0.3% in the UK and France.

HSBC will move a large part of its off-balance sheet funded derivative investments in the structured investment on its balance sheet. The bank will also support these structured investment vehicles with $35 billion of its own funding.

Airbus and China have agreed to sign $15 billion of contract to purchase 160 commercial passenger jets on the eve of the French President Sarkozy visit to China.

Asian markets rallied across the region after better than expected start of the holiday shopping season in the U.S.

Korea led the gainers in the region with a rise of 4.65% followed by an increase of 4.1% in Hong Kong, of 2.8% in Singapore, of 2.2% in Australia and India, and of 1.2% in Philippines and Thailand.

Financial markets in the region have been volatile and directionless in the last two weeks. Markets have traded sideways and tracked the volatility in the U.S. market. On Friday, after 1.4% rise in the Dow Jones Industrial Average, indexes in Asia rebounded on the hopes that the U.S. consumer will keep spending during this holiday. Many Asian economies are linked to the U.S. economic growth and rely on the U.S. consumer spending. China, Japan, and Korean companies rely on the health of their exports to the U.S. to sustain revenue and earnings growth.

Exporters in Japan led the gainers in Tokyo trading. Sony advanced 4.5%, Sharp jumped 5%, Nintendo increased 5% on the strength in Tokyo stocks. Toyota, Nissan, and Cannon increased between 2% and 3%. Mizuho Financial jumped 3.5% as financial and realty stocks recovered after a week of volatility.

Hong Kong property stocks jumped with a general strength in the trading. Cheung Kong jumped 4% and Henderson Land increased 3%.