U.S. Stocks Rise on Fed and Rate Plan

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

U.S. stocks edged higher after trading up and down during the session. Dow added 0.45%, S&P increases 0.8%, but Nasdaq declined 0.3%. U.S. and several banks are in negotiations to hold firm interest rates on variable rate mortgages next year. U.S. markets jumped after the commnets from the Fed chairman reassured investors that another interest rate cut may happen after the next meeting.

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

[R]Global Markets Indexes[/R]

Dow Jones Industrial Average edged higher by 59.99 or 0.45% to a close of 13,371.72, S&P 500 increased 11.42 or 0.78% to 1,481.14, and Nasdaq Composite Index declined 7.17 or 0.27% to a close of 2,660.96. In Toronto TSX Composite increased 25.23 or 0.18% to close at 13,689.12.

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

IBM led the decliners in the index with a fall of 2.2% followed by losses in Coca Cola of 1.1%, in Intel of 1%, in Johnson & Johnson of 0.96%, and in Merck of 0.93%. JP Morgan led the gainers in the index with a rise of 4.5% followed by increases in American Express of 3.7%, in General Motors of 3.65%, in Honeywell of 3.2%, and in Citigroup of 3.2%.

Of the stocks in S&P 500, 350 closed higher, 146 fell, and 4 were unchanged. Nine stocks fell more than 3% and forty eight increased 3% or more.

Freddie Mac led the gainers in the index for the second day in a row with a rise of 19% followed by increases in MBIA of 18.8%, in Fannie Mae of 18.6%, in Countrywide Financial of 16.34%, in Ambac Financial of 16.32%, and DR Horton of 14.33%.

In London FTSE 100 Index closed up 83.40 or 1.31% to 6,432.50, in Paris CAC 40 Index increased 72.46 or 1.29% to close at 5,670.57, and in Frankfurt DAX index advanced 105.33 or 1.36% to close at 7,870.52. In Zurich trading SMI rebounded 93.89 or 1.07% to close at 8,828.36.

In Tokyo Nikkei 225 Index lost 166.93 or 1.08% to close at 15,680.67, in Hong Kong Hang Seng index closed up 161.07 or 0.57% to 28,643.61, in Australia ASX 200 closed up 88.60 or 1.37% to close 6,533.10.

In South Korea Kospi Index decreased 28.44 or 1.51% to close at 1,906.00, Thailand closed up 1.64 or 0.19% to 846.4, and Indonesia edged lower 11.48 or 0.43% to 2,688.33. India soared 359.93 or 1.89% to 19,363.19.

In Latin Markets Peru led the gainers with a rise of 1.75% followed by increases in Venezuela of 1.59%, in Brazil of 1.4%, in Mexico of 1.3%, and in Colombia of 0.2%. Argentina declined 1.3%.

Bond Yields edged higher on 10-year U.S. bonds to 4.03% and 30-year bonds increased to 4.41%.

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

Crude oil declined $2.30 to close at $88.71 per barrel for a front month contract, up 39.00% for the year, natural gas decreased 15 cents to $7.30 per mBtu, and gasoline futures decreased 8.90 cents to close at 228.39 cents per gallon.

Gold edged lower $13.20 in New York trading to close at $789.10 per ounce, silver closed down 28 cents to $14.165 per ounce, and copper for front month delivery increased 9.05 cents to 318.45 cents per pound and in London trading closed down $165.00 to $6,847.50.

Dollar edged higher against euro to $1.4633 and higher to 112.2300 yen.


[R]10:30AM New York – U.S. stocks rise sharply in the morning trading on the Fed chairman comments.[/R]

U.S. markets opened sharply higher after the comments from the Fed chairman. Dow Jones added 113.45 to 13,425, Nasdaq jumped 11.7 to 2,679, and S&P 500 increased 13.69 to 1,483.

After the close of markets yesterday the Fed chairman Bernanke comments suggested that risk to economic slow down is higher than the rise of inflation. The comments were widely perceived by investors as a signal to a rate cut at the next Fed meeting on Dec 11th.

The Commerce Department reported construction spending declined 0.8% and revised September spending to an increase of 0.2%. Separately the personal income in the month increased at a seasonally adjusted rate of 0.2% from September and personal spending increased 0.2% from the previous month. The price index for personal consumption expenditure increased 0.3% and core index excluding food and energy rose 0.2%.

FedEx will raise ground shipment rates by 4.9% beginning the first week of January 2008 after a similar rate hike was announced by UPS.

Tiffany ((TIF)) reported third quarter sales increase of 18% and same store sales increase of 10% in the U.S. and 8% in the international markets. Net sales in the quarter increased $623 million and earnings rose to $98 million or 71 cents per share compared to $29 million or 21 cents a year ago.

European markets advanced the after the opening of the U.S. markets. Overnight comments from the Fed chairman were received favorably by investors. Ten largest European market advanced by mid-day trading led by a rise of 1.7% in Germany and Belgium, 1.5% in France and UK, and 0.7% in Switzerland and Spain.

Dutch recruitment company Vedior soared 30% after it reported that it may receive an offer from its rival Randstad Holding. Vedior stock had jumped prior to the announcement prompting an inquiry from the Dutch market regulator AFM.

Resource stocks surged led by Anglo American with a rise of 4%, Vedanta Resources of 3%, and Antofagasta of 2.5%.

Asian markets across the region advanced led by a sharp rise in India of 1.9% followed by increases in Taiwan of 1.7%, in South Korea of 1.5%, in Australia of 1.3%, and in Japan, Philippines, and Malaysia of 1.1%.

The investors’ sentiment for the U.S. rate cut was reinforced after a speech by the U.S. Fed chairman Bernanke. Investors interpreted his comments favorably and lifted stocks of companies that export to the U.S.

Shipbuilding companies in Korea, Steel makers in China, Japan, and Korea, and electronics companies in Japan advanced.

Nippon Steel advanced 5%, JFE Holidgs surged 5%, and Mitsui Engineering added 6%. Shipbuilders in Korea surged as well.

Sime Darby, largest Malaysian palm oil company, soared 25%, after it re-listed on Kuala Lumpur Stock Exchange with several merged businesses.

A consortium of U.S. private equity investors and SK Telecom of Korea offered to invest $5 billion in convertible bonds of Sprint Nextel. The company rejected an offer from the South Korean led investor offer.


[R]5:00AM New York, 9:00PM Sydney - The Australia index gained 1.4% after led by energy and resource stocks.[/R]

ASX 200 index gained 1.4% or 88.60 to close at 6,533.10. BHP Billiton was up 2.3% and Woodside added 2.1% after oil and copper advanced.

Preliminary market turnover was 2.35 billion shares worth A$11.55 billion, with 716 stocks rising, 538 falling and 356 unchanged.

The top traded stock was Flinders Diamonds with 155.58 million shares changing hands worth A$13.82 million. Murchison Metals chairman Paul Kopejtka today told shareholders during the company''s annual general meeting that they had not ruled out offering a better deal to secure its takeover bid for Midwest Corporation.

Murchison is offering one of its shares for 1.08 Midwest shares. Murchison''s board is expected to discuss its options in the next few days. Mr Kopejtka said he could either choose to wait for the bid to close on December 6, extend the offer date, or extend the offer date with a revised bid. Murchison closed up 3.1%.

Health care company, Symbion Health is expecting a 10% increase in its full year earnings. Chairman Paul McClintock today also warned shareholders at the company''s annual general meeting that 20% stakeholder Primary Health was continuing to try to disrupt its proposed merger transaction with Healthscope.

Primary said it would declare A$2.65 billion offer for Symbion unconditional if it received at least 50.1% acceptances by December 10. McClintock said Primary Health Care''s objective appeared to be to acquire Symbion Health for the lowest possible price and to maximize value for its shareholders at the expense of Symbion Health.

Primary had previously used its voting power to block an early merger plan put forward by Symbion and Healthscope. It had also recently instituted legal action against Symbion and its directors.

Symbion today also said it had performed well in the first quarter of current fiscal year and expected to grow annual earnings before interest and tax (EBIT) by at least 10%. Symbion''s shares rose 2.3%.

The dollar closed stronger today after struggling to maintain a sustained rally after the re-ignition of fears of more sub-prime mortgage losses dented momentum. At the close the dollar was trading at US$0.8862/65, up from yesterday''s close of US$0.8828/34.

Of the ASX 200 index shares, Bendigo Bank Limited led the gainers with a rise of 7.3% followed by increases in Hills Industries and Oxiana Limited at 6.5%, in Sally Malay Mini of 6.4%, and in Worleyparsons of 5.8%.

Of the ASX 200 index stocks National Australia Bank led the decliners with a fall of 2% followed by losses in Paperlinx Limited of 2.02%, Challenger Finance by 2.6%, in Transfield Services by 3.1%, and in Centro Properties of 3.2%.

In the other stocks Rio Tinto gained 2.3%.

In the banking sector Australia and New Zealand Bank added 1.8%, Commonwealth Bank of Australia put on 2.3%, Westpac advanced 2.6%, Macquarie Group was higher at 1.5% and Babcock & Brown gained 1.5%.

Energy stocks gained, Santos added 2.1% and Oil Search gained 2%. In the gold sector Lihir added 1.3% but Newcrest was lower at 0.7%.

The retail sector closed stronger, Woolworths added 2.8%, Wesfarmers was up 2.6%, David Jones was higher at 2.3% and Harvey Norman gained 0.4%.

The media stocks were mixed, Seven Network gained 1.3%, News Corporation added 0.1%, and Fairfax put on 0.2% after indicating that its revenue growth in the first four months of fiscal 2008 was in ""the mid-single digits''''. Publishing and Broadcasting shed 1.2%.

Gaming company Tattersall''s rallied 2.8% despite saying that new regulations that cap poker machine numbers would make it difficult to beat last year''s operating profit.

Telstra Corp dropped 0.6% to $3.15, and Qantas gained 2.1%.


[R]4:00AM New York, 6:00PM Tokyo - U.S. interest rate cut speculation lifts Tokyo up 1.08%. Core consumer prices rise 0.1% in October. Housing starts fell 35% dragged by permits backlogs.[/R]

In Tokyo trading Nikkei 225 rose 1.08% or 166.93 to 15,680.67, while the broader Topix Index gained 14.71 to 1.531.88.

In the first section of the Tokyo Stock Exchange 10 billion shares worth 1.1 trillion yen were traded and in the second section 316 million shares valued at 5.9 billion yen changed hands.

Of the Nikkei 225 index shares 166 gained, 52 declined, and 7 were unchanged.

Isuzu Motors led advancers rising 9.32%, followed by Nippon Steel, climbing 8.54% after Credit Suisse raised the rating of steel makers to “market weight” from “underweight”.

Financial stocks also gained after U.S. Federal Reserve Chairman Ben Bernanke said yesterday the risks on economic outlook were “even greater than usual”, increasing expectations that borrowing costs will be slashed at the December 11 meeting. Mitsubishi UFJ Financial Group edged up 1.21% and Mizuho Financial Group jumped 2.06%.

Japan’s Ministry of International Affairs and Communications Statistics Bureau reported today the core consumer price index for Japan was up 100.9 or 0.3% for September and for the Ku-area in Tokyo the core consumer price index for November leapt 0.3% from October and 0.3% from last year.

Food prices in October surged 0.2% from previous month and 0.9% over the previous year, with housing remaining unchanged at 99.8. Fuel, light and water charges was 0.7% on October for the month and 1.0% for the year. In addition, clothing and footwear firmed 1.1% for the month and 0.3% from the previous year, while transport and communications further gained 0.3% in the month and 0.7% over the previous.

The Statistics Bureau that for core consumer prices for the Ku-area of Tokyo food prices slipped 1.4% in November and firmed 0.6% for the year. Food, light and water charges, transportation and communications rose 1.4% and 0.7% for the year respectively, while clothes and footwear dipped 0.1% for the year in November.

According to the statistics, the unemployment rose by a seasonally adjusted 4.0% in October, while the number of persons employed fell 0.2% in October to 64.25 million. The laborforce stood at 66.94 million with 64.24 million employed and 55.23 million are classified as employees.

Furthermore, monthly consumer spending per household for two or more person household rose 0.6% to 296,984 yen in October. Similarly, average monthly income per household was gauged up 0.4% in real terms to 469,981 yen and consumption expenditures was up 2.2% to 326,737 yen.

The Ministry of Land, Infrastructure and Transport said today Japan housing starts tumbled 35% to 851,000 units from a year earlier. September starts dropped 44%, a 40-year record.

Of the Nikkei 225 index shares, Isuzu Motors led gainers with a rise of 9.32%, followed by gains of 8.54% in Nippon Steel, 7.80% in Sumitomo Metal Mining, 6.80 in Trend Micro Incorporated, and 6.40% in Mitsumi Electric Company.

Shipping lines also gained as the Baltic Index firmed 1.7% yesterday driven by expectations demand for raw materials in emerging economies will remain. Kawasaki Kisen rose 5.20% and Kawasaki Heavy Industries climbed 2.54% as a result.

Meiji Dairies led the decliners in the Nikkei 225 index shares with a decline of 4.27%, followed by losses in Daiichi Sankyo Company of 3.61%, in Mitsui Sumitomo Financial Group of 3.45%, in Chiba Bank of 3.16%, and in Yahoo Japan of 2.74%.

Nikkei news reported today Daiichi Sankyo Company would divest its entire holding in subsidiary Nippon Nyukazai Company and its 52% shareholding in Sino-Japan Chemical at the end of February 2008. The company wants to concentrate on its pharmaceutical business.