U.S. Stocks Drop 3%; Gold Up 3%, Oil Up $10.75

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

The indexes S&P 500, Dow and Nasdaq dropped 3% on unemployment report, record surge in oil and gold prices and worries of economic slow-down. WaMu Inc led the decliners in the S&P 500 index with a loss of 12.5% followed by losses in MGIC Investment Corp of 11.3%, in Ambac Financial of 10.3% and in Pulte Homes of 10%. AIG led the decliners in the Dow Jones Index with a loss of 6.8% followed by losses in American Express of 5.8%. Of the S&P 500 stocks, 286 lost more than 3%.

10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney[R]– record two-day surge in oil, sharp rise in gold and a gain in May unemployment knocked stocks lower. Dow, Nasdaq and S&P 500 indexes plunged 3%.[/R]

Global Markets Update

U.S. stocks fell sharply after the unemployment in May rose to 5.5% from 5% in April and from 4.5% in May of 2007. The monthly payrolls declined for the second month in a row and sparked the fears of economic slow-down. Market indexes, Dow, Nasdaq and S&P 500 fell more than 1.7%. National Semiconductor gained after earnings rose 8% and earnings per share increased to 28 cents.

Crude oil rose to a record high above $137 a barrel on a surge of 10% following a rise of 4%. In a record two day rise in the recent years, crude oil is increasingly used as a hedge against the falling dollar. The Fed’s lack of willingness to defend the dollar also led a surge in gold.

Chevron oil operations in Nigeria are looking to strike if higher pay demands are not met. Weak dollar also contributed to the rise in oil price. And, a steady rise in demand from the U.S. and accelerating demand from Asia has kept crude oil demand higher in the first five months of the year.

UK stocks fell after May unemployment rose in the U.S. Crude oil surged 9% in London and New York trading on sustained imports from Asia and the U.S. Crude oil surged to a record high $137 in trading in London and New York. Energy stocks led FTSE 100 index stocks. Lloyds TSB Group said in regulatory filing yesterday that it will make a provision of £180 million pounds in the wake of a U.S. probe.

European market indexes fell across the region as crude oil jumped 9% in London trading. The sustained imports from Asia and the U.S., falling dollar and the use of oil as a hedge and worries related to supply are contributing to the crude oil rise. Every member of the CAC-40 index in Paris fell and only of DAX 30 index stocks in Germany closed higher. Switzerland, Germany and France dropped more than 2%.

European Markets indexes

In London FTSE 100 Index closed lower 88.50 or 1.48% to 5,906.80, in Paris CAC 40 Index decreased 111.74 or 2.28% to close at 4,795.32 and in Frankfurt DAX index lower 138.02 or 1.99% to close at 6,803.81. In Zurich trading SMI decreased 180.81 or 2.39% to close at 7,386.42.

North American Markets indexes

Dow Jones Industrial Average dropped 394.64 or 3.13% to a close of 12,209.81, S&P 500 closed up 43.37 or 3.09% to 1,360.68, and Nasdaq Composite Index decreased 75.38 or 2.96% to close at 2,474.56. In Toronto TSX Composite closed down 13.36 or 0.09% to 14,969.55.

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

AIG led the decliners in the Dow Jones Index with a loss of 6.8% followed losses in American Express of 5.8%, in Citigroup of 5.4%, in Boeing of 5.3%, in General Motors of 4.8%, in JP Morgan Chase of 4.77% and in Bank of America of 4.66%.

Of the stocks in S&P 500 index, 17 stocks increased, 483 declined, and none was unchanged. Of the stocks in the index, 286 stocks fell more than 3% and 2 gained more than 3%.

WaMu Inc led the decliners in the S&P 500 index with a loss of 12.5% followed by losses in MGIC Investment Corp of 11.3%, in Ambac Financial of 10.3%, in Pulte Homes of 10%, in MBIA Inc of 9.9%, in Centex Corp of 9.8%, in KB Home of 8.7%, in Morgan Stanley of 8.5%, in D R Horton of 7.8% and in Goodyear Tire and National City Corp of 7.5%.

National Semiconductor led the gainers in the S&P 500 index with a rise of 4.8% followed increases in Chesapeake Energy of 3.5%, in XTO Energy of 1.5%, in Occidental Petroleum of 1.2% and in Peabody Energy and Newmont Mining of 0.9%.

South American Markets Indexes

Brazil led the decliners in the Latin American markets with a fall of 2.0% followed by decreases in Chile of 1.9%, in Mexico of Argentina of 0.45%, in Venezuela of 1.46% in Chile of 1.07% and in Mexico of 1.8% and in Argentina of 0.45%. Colombia fell 0.07% and Peru declined 0.03%. Venezuela, the lone gainers in the region surged 3.13%.

Asian markets

In Tokyo Nikkei 225 Index closed higher 148.32 or 1.03% to 14,489.44, in Hong Kong Hang Seng index increased 146.89 or 0.61% closed to 24,402.18. In Australia ASX 200 index higher 62.00 or 1.12% to close 5,592.10. In Malaysia KL Composite index increased 25.01 or 2.04% closed to 1,248.57.

In Thailand SET index closed higher 7.51 or 0.93% to 817.33 and Indonesia JSE Index edged increased 2.56 or 0.11% to 2,402.24. Sensex index in India decreased 197.54 or 1.25% to 15,572.18. Market of South Korea was closed today.

Commodities, Metals, and Currencies

Crude oil increased $10.37 to close at $138.16 a barrel for a front month contract, natural gas increased 16 cents to $12.66 per mBtu, and gasoline futures increased 6.02 cents to close at 353.51 cents per gallon.

Gold increased $23.50 in New York trading to close at $899.50 per ounce, silver closed up 26 cents to $17.43 per ounce, and copper for front month delivery increased 8 cents to $3.62 per pound.

Wheat futures increased 25.50 cent in Chicago trading and closed at $8.11 per bushel. Sugar increased 18 cent to $9.74 per pound. Soybean future closed up 5 cents to $14.57 a bushel.

Dollar edged lower and traded near record low against euro to $1.5778 and fell against yen to 104.92.

Yields on U.S. bonds decreased to 3.91% with 10 years of maturities and decreased to 4.62% with 30-year of maturities.