U.S. Stocks Decline on Economy Worries

123jump.com Staff
03 Dec, 2007
New York City

Weak manufacturing report held stocks back in the afternoon trading. U.S. market averages declined fractionally at close. European markets closed lower as well. Merger activity heated up in Europe after Vivendi and Activision agreed to combine their electronic games businesss. Vimple Communication said that it is exploring a rival takever worth $4 billion.

[R]4:30PM New York, 10:30 PM Frankfurt, 2:30AM Mumbai – U.S. stocks fell on the economic worries.[/R]

Dow Jones Industrial Average fell 57.15 to 13,314.57, Nasdaq declined 23.83, and S&P 500 edged lower 8.72 to 1,472.42.

Of the 30 stocks in Dow, 10 increased and 20 declined. General Motors led the decliners with a loss of 4.1% followed by losses in General Electric of 3.5%, in Alcoa of 2.4%, in AIG of 2.1%. McDonalds led the gainers with a rise of 2.33% followed by increases DuPont of 1.54%, in Honeywell International of 0.8%.

S&P 500 stocks, 160 increased and 338 declined, and 2 were unchanged. E*Trade led the decliners with a loss of 11% followed by declines in MBIA of 7%, in Robert Half International of 7%, in Big Lots of 5.9%. Lennar Corp led the gainers with a rise of 5.7% followed by increases in Hess of 5%, in Centex of 4.75%. Sears Holdings increased 4.7% followed by Express Script edged 4% higher.

European markets opened higher but lost their gains after the U.S. stocks weakened. Investors can not shake off sub-prime worries.

Switzerland led the decliners in the region with a loss of 1.4% followed by declines in Norway and the Netherlands of 0.9%, and in UK and France of 0.7%. Italy, Germany, and Spain fell 0.4%.

Vivendi and Activison have agreed to merge their game division in a deal worth $19 billion.

Rio Tinto declined 3% after it company chief executive that the BHP offer is very far from what company expects.

Vimple Communications is exploring a takeover of rival Russian telecom company. The deal is likely to be valued at around $4 billion.

Asian markets in the region were weak with the growing uncertainty in the global credit markets. Japan fell 0.3% but Hong Kong advanced 0.9% and India rose 0.8%. Philippines led the region with a rise of 1.3% followed by increase of 1.1% in Singapore, in Indonesia of 0.7%, and in Australia of 0.05%.

Thailand led the decliners in the region with a fall of 1.8% followed by losses of Taiwan and South Korea.

Volatility in Japan and Hong Kong persisted after comments from the Bank of Japan Governor said that the U.S. credit market turmoil may continue for a while.

Exporters and financial companies fell on the comments in Japan.

In Hong Kong property companies edged higher after the yields on the U.S. bonds edged lower. Chinese telecom stocks fell after the news that China is planning to liberate the telecom market further in the next several weeks.


[R]5:00AM New York, 9:00PM Sydney - The Australia index gained 0.01% after positive trade in resource stocks.[/R]

ASX 200 index gained 0.01% or 0.4 to close at 6,533.10. BHP Billiton was up 0.5% and Rio Tinto added 1.2%.

Publishing and Broadcasting (PBL) shareholders today came out ahead as two company spin-offs began trading on the Australian Stock Exchange.

PBL''s gaming assets were spun off into Crown and the media assets were de-merged into Consolidated Media Holdings Ltd last month.

PBL shareholders received one share in each of the new companies and $3.00 cash for each PBL share they owned. At 12.10pm today, the total value of one Crown share, one CMH share and the $3.00 cash payment was $21.35. PBL shares last traded at $20.80 on Friday.

Crown shares began trading today at $14.88 each and were at $14.35 on a volume of about 722,000 at 12.18pm today and traded between $14 and as high as $15. CMH began trading at $3.70 and were at $3.98 on a volume of about 3.4 million and traded between $3.65 and $4.

PBL shareholders last month voted in favor of de-merging the company''s media and gaming assets. At the time PBL chairman James Packer said that shareholders would gain greater benefit from a ""pure play"" gaming business and a new media business, and the split should result in higher share prices.

Crown''s businesses include the Crown casino in Melbourne and Burswood casino in Perth and a 41.4% stake in Melco PBL Entertainment (Macau) Ltd and investments in other international gaming businesses.

Last month, PBL said it was looking at expansion in the U.S. and was examining the books of at least one U.S. gaming company. Media speculation suggests the business in question is in Pennsylvania, and could be Harrah''s Chester Casino or the Prairie Meadows Racetrack and Casino, at a cost of $2 billion.

According to figures released by the Australian Bureau of Statistics the profits fell by a seasonally adjusted 2.1% in the September quarter compared to the previous quarter against a 2% increase that had been forecast by economists.

The Australian Bureau of Statistics'' business indicators data showed business inventories – goods in warehouses and on shelves – grew by a seasonally adjusted 1.3%, which is higher than economists'' forecasts of a 0.5% increase.

Economists had earlier forecast a 1.0% increase in the September quarter gross domestic product (GDP) released on Wednesday, faster than the 0.9% increase in the June quarter.

This is expected to lift the annual economic growth rate to a 4.8%, buoyed by strong consumer demand, rising construction activity and improved exports in the quarter.

Australia''s trade deficit grew to a record in October on the back of falling exports due to a strong Australian dollar and export bottlenecks. Statistics from the Australian Bureau of Statistics show that the goods and services deficit widened to $2.983 billion, seasonally adjusted, marking its worst level since records of the monthly measure began being kept in 1971.

The result compared to an upwardly revised deficit of $1.916 billion in September. During the month, exports fell 3% in adjusted terms, while imports rose 2%. Economists were expecting a deficit of $1.9 billion in October.

The dollar closed weaker today due to the October trade deficit. At the close the dollar was trading at $0.8806/11, down from Friday''s close of $0.8862/65.

Of the ASX 200 index shares, AWB led the gainers with a rise of 4.7% followed by increases in Perilya Limited by 4.4%, in Timbercorp by 4.1%, in Seek Limited by 4.1%, and in Incitec Pivot Limited by 4%.

Of the ASX 200 index stocks Boom Logistics led the decliners with a fall of 6% followed by losses in Murchison Metals of 5%, Gud holdings Limited by 4.8%, in United Group Limited by 4.5%, and 3.8% in Macmahon Holdings 3.8%.

In other stocks Commonwealth bank of Australia added 0.02%, National Australian Bank was up 1.3%, Westpac banking and Australia and New Zealand bank were lower at 0.5% and 1.1% respectively.

In the energy sector all stocks were down Woodside Petroleum was lower at 1%, Oil Search declined by 2.4%, and Santos shed 2.7%. In the gold sector Newcrest mining shed 1.8% and Lihir was weaker at 1%.

The retailers were declined with Harvey Norman down by 1%, Woolworths by 1.4%, Wesfarmers Limited and David Jones by 1%. Media stocks were mixed, with News Corp was up 0.6% and Fairfax was down 0.2%.