Oil, Corn, Soy Surge; Lehman Plunges 13%

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

Crude oil futures shot up $6 at peak before settling with a rise of 4% or $5.40. The sharp rise in oil dragged stocks lower led by losses in financial and tech stocks. Lehman Brothers fell 13% and Goldman Sachs dropped $4.80 or 3%. The chief executive of Royal Bank of Scotland estimated more credit market problems in the next fifteen months.

[R]4:00PM New York - US stocks fall on inflation expectations. Oil prices surge 4%. Nasdaq declined 2% and S&P 500 and Dow lost 1.7%.[/R]

U.S. stocks dropped on mounting inflation expectations that sparked speculation that the Fed will raise interest rates. Lehman Brothers plunged 13%.

Oil, soy and corn surge to a record high

Crude oil prices rose after the U.S. Energy Department reported today on its website that oil supplies fell 4.56 million barrels to 302.2 million as China oil imports advanced 25% in May after a disastrous earthquake. Analysts had estimated a fall of 1.5 million barrels.

Crude oil futures rose 4.1% or $5.40 to $136.71.

Corn prices extended gains from yesterday after the US Department of Agriculture reported in its revised projections for this year’s crop that bad weather will continue to affect farmers in the mid-west, prompting corn production to decline by 10% to 11.735 billion bushels this year.

Corn futures for the immediate month delivery increased by 30 cents or 4.5% to a record $7.0325 a bushel by mid-day on the Chicago Board of Trade. Soybean futures for July delivery also advanced 67.25 cents or 4.7% to $15.1375 a bushel in Chicago, after earlier surging to the exchange limit of 70 cents to $15.165. corn yield in the current harvest were lowered to 149 bushel from 153.9 bushel an acre according to the latest report from the USDA.

Soybean price is expected to surge in price in the coming weeks as more farmers choose to plant corn to meet the demand from ethanol producers. And now with the bad weather yields for soybean are expected to fall as well. Only 57% of the soybean crop was reported in good condition by the USDA.

Wheat futures for July gained 51 cents, or 6.3% to $8.60 a bushel in Chicago, while futures for July delivery edged up 39 cents, or 2% to $19.81 per 100 pounds in Chicago

In the Dow Jones Industrial Average Du Point led advancers in the index shares followed by increases in Exxon Mobile of 0.59% and Chevron Corp of 0.09%.

Energy stocks rose on rising oil prices

Alcoa Inc led decliners in the index shares with a drop of 6.16% followed by losses in America International of 3.33%, in American Express of 3.25% and Intel Corp of 2.87%.

Alcoa fell after JP Morgan downgraded the stock to ``neutral'' from ``overweight''. Tech stocks fell as well. Microsoft fell 2.12% and Hewlett Packard dropped 2.56%.

In the S&P 500 index stocks Staples Inc led advancers with 4.6% rise followed by rises in XTO Energy of 4.3%, in Nabors Industrial Ltd of 3.21% and Varian Medical Services of 2.90%.

Staples Inc rose on news the company agreed to buy Corporate Express NV for 1.68 billion euros or 9.25 euros per share after lifting its offer three times.

Amsterdam, the Netherlands based Corporate Express agreed to accept cash offer from Staples Inc of € 1.7 billion or € 9.25 per ordinary share. Staples will assume € 1 billion euro debt and pay € 300 million to the preferred stock holders. The deal was consummated after Staples revised its offer price by 28% from its initial offer in March. Corporate Express will also pay a termination fee to break a deal that the Corporate Express signed with France based Lyreco.

MGIC led decliners in the index shares with a fall of 16.6% followed by losses in MicroChip Tech of 8.72% and in Wamu Inc of 7.93%.

Financial stocks fell the most among 10 industries in the S&P 500 industry groups. Washington Mutual retreated to the lowest in 16 years, losing 59 cents, or 8.8% to $6.09.

Lehman declined $3.75, or 13.6%to $23.75 and Goldman Sachs Group Inc plunged $4.76 or 3% to $162.45. Lehman Brothers has lost more than 50% of its value since the beginning of the year.

Transportation stocks fell as well, FedEx lost $2.56, or 2.8% to $87.61 and UPS slid $1.69 or 2.4% to $68.30.

Micron Technologies and Alcoa decline on downgrades

Microchip Technology Inc., the semiconductor maker fell $3.08, or 9% to $31.10 after the stock was cut to ``neutral'' from ``overweight'' by analysts at JPMorgan Chase & Co.

Alcoa Inc. led the Dow average lower, sliding $2.75, or 6.4%, to $39.97. The world's third-largest aluminum producer and the only independent aluminum company in North America was downgraded to ‘neutral’ by analysts at JP Morgan.

Hooker Furniture Corporation, an importer and manufacturer of residential furniture reported first quarter revenues slipped 9% to $71 million from $77.3 million a year ago. Net income in the quarter decreased 65.38% to $2.6 million or 23 cents per diluted share compared to net income of $4.3 million or 33 cents per share, a year ago.

Hooker Furniture Corporation ((HOFT)) in the last one year traded as high as $24.00 in March 2008 and as low as $15.52 in November 2007. Hooker stock dropped $2.9 to $17.49.

Korn/Ferry International, a global recruitment services company reported fourth quarter revenues rose 16% to $220.5 million from $189.8 million a year ago. Net income in the quarter increased 14.01% to $15.7 million or 36 cents per diluted share compared to net income of $13.5 million or 30 cents per share, a year ago.

Korn/Ferry International ((KFY)) in the last one year traded as high as $27.13 in June 2007 and as low as $13.10 in January 2008. Korn/Ferry lost 72 cents to $16.21.

Amerigroup Corp. dropped $3.16, or 12%, to $24.02 after it lowered its profit forecast.