AMR, UPS and Goldman Down

123jump.com Staff
09 Apr, 2008
New York City

U.S. stocks fell sharply in the morning trading after string of negative news. Crude oil surpassed $111 a barrel, UPS lowered its earnings estimates for the first quarter and Goldman Sachs reported higher level of level-3 assets and 35% decline in revenue at the end of the first quarter. American Airlines grounded 1,000 flights for inspections.

[R]12:45 PM New York – U.S. stocks edged lower after crude oil surged above $111, Goldman declared a decline in revenue and UPS lowered its earnings estimates.[/R]

Commodities prices continue to rise in the morning trading after yet another decline in dollar and talks of lower interest rates in the U.S.

Crude oil near month futures rose $2.33 to $110.83 and gasoline jumped 3.43 cents to $2.78 a gallon in wholesale market trading. Gold jumped $9.90 to $927 per ounce, silver added 58 cents to $18.29 and copper increased 9.3 cents to $3.98 near record price.

UPS, the largest package delivery company said that the domestic shipment volume are declining and higher oil prices will crimp the operating margins. The company lowered its earnings outlook for the first quarter to between 86 cents and 87 cents per share from its previous guidance of between 94 cents and 98 cents per share.

UPS ((UPS)) stock declined $2.45 to $70.89 dragging other transportation and retailer stocks. FedEx ((FDX)) fell $2.25 to $93.80.

AMR, parent of American Airlines declined nearly 10% or $1.01 to $9.30 after oil spike above $111 a barrel in the intra-day trading.

Goldman Sachs ((GS)) in a regulatory filing with the SEC suggested that its Level-3 assets increased. The investment bankers reported assets marked as level-1 at $135 billion, as level-2 at $621 billion and as level-3 of $82.3 billion as of February 2008. At the end of November 2007, the level-1 assets were $138 billion, at level-2 were $573.6 billion and at level-3 were $54.7 billion.

Goldman also reported 35% decline in revenue to $8.34 billion on credit and trading losses.

Goldman lost $135 million in its principal account trading in the quarter compared with strong results in the same prior year period. Results in fixed income division were adversely affected by continued deterioration in the broader credit markets. Net losses on residential mortgage loans and securities were approximately $1 billion. In addition, credit products included a loss of approximately $1 billion ($1.4 billion before hedges) related to non-investment-grade credit origination activities, as well as lower results from investments compared with the first quarter of 2007.

Net revenues in interest rate products, currencies and commodities were significantly higher compared with the first quarter of 2007.