U.S. Stocks, Brazil Down; Europe GDP Up

123jump.com Staff
03 Jun, 2008
New York City

U.S. stocks declined as investors worried that credit market losses may increased. Lehman Brothers, the subject of intense investor speculation said that it did not access Fed discount window and it has sufficient liquidty. Lehman dropped 9% after losing 8% in the previous session. Fed Chairman Bernanke in his comments talked tough on inflation and defending dollar, however investors remain skeptical. Brazil lost 2.6%. European markets recovered on 0.8% rise in GDP in the first quarter.

10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney[R]– Financial stocks dragged market averages for the second day in a row. Worries related to Lehman Brothers financial health kept trading sentiment weak. Brazil market index lost 2.6%.[/R]

Global Markets Update

Fed Chairman Bernanke in his latest speech appears to stress the importance of controlling inflation expectations and defending the U.S. dollar. The renewed stress on dollar and focus on inflation lifted dollar. However, investors remain skeptical. In the past, the Fed has talked about containing inflation and seen the Fed lowering inflation to a historic low. Inflation in food and energy in the last five years and rising home prices in the last ten years have only ravaged consumer purchasing power.

U.S. stocks struggle as worries of new credit market losses make rounds. Recent downgrade of bonds from Moody’s and warnings of possible asset write downs from financial brokerages left market on the defensive. Lehman Brothers is facing intense scrutiny from investors. Lehman at the end of the quarter had a financial leverage of 27 to 1 and remains vulnerable to weakness in the housing market and leveraged loan after-market.

European retailers lifted the market indices in the region higher while declining oil price added the positive market sentiment. The European Statistics office Eurostat reported economic growth in the region rose 0.8% in the first quarter of 2008. Investment and construction spending in Germany helped the region. German auto sales, exports and production fell in May but for the first five months in the year registered gains.

European Markets indexes

In London FTSE 100 Index closed higher 50.10 or 0.83% to 6,057.70, in Paris CAC 40 Index increased 48.50 or 0.98% to close at 4,983.71 and in Frankfurt DAX index higher 10.36 or 0.15% to close at 7,019.13. In Zurich trading SMI increased 34.74 or 0.46% to close at 7,590.44.

North American Markets indexes

Dow Jones Industrial Average fell 100.97 or 0.81% to a close of 12,402.85, S&P 500 closed down 8.02 or 1.05% to 1,377.65, and Nasdaq Composite Index decreased 11.05 or 0.44% to close at 2,480.48. In Toronto TSX Composite closed down 85.57 or 0.58% to 14,728.61.

Of the 30 stocks in Dow Jones Industrial Average, 9 closed higher, 21 closed lower, and none was unchanged.

Boeing led the decliners in the Dow Jones Industrial Average with a loss of 3.7% followed by losses in Alcoa of 2.54%, in Exxon Mobil of 2.4%, in American Express of 2%, in Microsoft of 1.76% and in McDonalds of 1.7%. Wal-Mart led the gainers in the Dow Jones index with a rise of 1% followed by rises in General Motors of 0.8%, in Merck & Company of 0.47% and in AIG of 0.4%.

Of the stocks in S&P 500 index, 189 stocks increased, 308 declined, and 3 were unchanged. Of the stocks in the index, 21 stocks fell more than 3% and 14 gained more than 3%.

Lehman Brothers led the decliners in the S&P 500 index with a loss of 9.5% followed by losses in Tyson Foods of 7.8%, in Goodrich Corp of 6.6%, in Wachovia Corp of 6.3%, in Eastman Kodak of 6.2% and in National City Corp of 5.9%.

KB Home led the gainers in the S&P 500 index with a rise of 5.6% followed by gains in SanDisk Corp of 5.5%, in DR Horton of 5%, in Moody’s Corp of 4.9% and in Target Corp of 4.1%.

South American Markets Indexes

Brazil led the decliners in the Latin American markets with a fall of 2.62% followed by decreases in Colombia of 1.24%, Argentina of 0.73%, in Mexico of 0.45% and in Chile of 0.06%. Venezuela led the gainers in the region with a rise of 1.34% and Peru added 0.05%.

Asian markets

In Tokyo Nikkei 225 Index closed lower 230.97 or 1.60% to 14,209.17, in Hong Kong Hang Seng index decreased 455.60 or 1.83% closed to 24,375.76. In Australia ASX 200 index lower 88.10 or 1.56% to close 5,574.20. In Malaysia KL Composite index decreased 4.92 or 0.39% closed to 1,257.57.

In South Korea Kospi Index decreased 28.14 or 1.52% to close at 1,819.39, in Thailand SET index closed lower 3.36 or 0.41% to 806.86 and Indonesia JSE Index edged decreased 23.95 or 0.99% to 2,403.81. Sensex index in India decreased 100.62 or 0.63% to 15,962.56.

Commodities, Metals, and Currencies

Crude oil increased $0.17 to close at $124.48 a barrel for a front month contract, natural gas decreased 9 cents to $12.13 per mBtu, and gasoline futures decreased 3.82 cents to close at 335.25 cents per gallon.

Gold decreased $1.60 in New York trading to close at $883.90 per ounce, silver closed down 0.5 cents to $16.83 per ounce, and copper for front month delivery decreased 0.95 cents to $3.59 per pound.

Wheat futures decreased 32 cent in Chicago trading and closed at $7.52 per bushel. Sugar decreased 60 cent to $9.71 per pound. Soybean future closed down 6.00 cents to $13.59 a bushel.

Dollar edged higher and traded near record low against euro to $1.5448 and rose against yen to 105.16.

Yields on U.S. bonds decreased to 3.87% with 10 years of maturities and decreased to 4.375% with 30-year of maturities.