Banks Fall in U.S. and Europe

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

Stocks in the final hours accelerated their losses as banks, transportation and tech stocks fell. Crude oil rebounded after the release if weekly inventory report. Fifth Third Bancorp plunged 27% after it announced a plan to raise $1 billion and sell assets to cover its rising losses. Morgan Stanley reported 61% fall in earnings. FedEx plunged to a one-year low after it reported loss and projected sharply lower earnings in the current quarter. European stocks fell.

4:30PM New York, 10:30PM Frankfurt, 4:00AM Sydney[R]– Banks fell for the second day after Fifth Third Bacorp said it plans to raise $1 billion and sell asset to maintain its cash reserve requirements.[/R]

Global Markets Update

U.S. stocks declined after FedEx reported quarterly loss on higher fuel price and asset write down. FedEx in the fourth quarter lost $241 million or 78 cents to per share compared to net income of $610 million or $1.96 per share a year ago. Revenue in the quarter rose 8% to $9.87 billion. UPS and FedEx dropped near one-year lows.

CarMax, the used car retailer revenue rose 3% but earnings fell 55% to $29.6 million. Earnings per share fell to 13 cents from 30 cents. Lindsay Corp, irrigation system provider, third quarter revenue 54% to $143.6 million and net income in the quarter increased to 47% $14.1 million or $1.15 per share.

Morgan Stanley net income fell 61% to $1.03 billion on a decline in revenue of 38% to $6.5 billion and earnings per share declined to 95 cents from $2.45 a share a year ago.

European stocks declined after credit market worries and rising inflation put investors on the defensive. Porsche, maker of luxury sports cars reported 10-month sales rose to 6.02 billion euros from 5.98 billion euros in the same period a year ago. Sales of SUV Cayene soared 47% and sports car GT2 fell 15%. Two largest paper manufacturers Stora Enso and UPM-Kymmene along with other companies projected lower earnings for the year on rising cost of pulp and fuel.

Stocks in London fell sharply after Chancellor of Exchequer cautioned against rising expectations of higher wages. The sharp rise in wages at a recent settlement between striking petrol tank drivers and Royal Dutch Shell prompted comments. In London trading stocks fell, led by a sharp decline in banks and home builders. J Sainsbury reported first quarter sales rise at a slower pace on 3% increase in food cost.

Realty stocks in Japan surged after comments from Mori Building suggested that office space rents may increase in Japan as much as 10%. The company also projected a rise in profit of 43% from a year ago as it completes the tallest office building in Shanghai. Japan and China are expected to announce a production sharing and gas field development project. GS Yuasa surged 12% on the speculation that rising energy prices will increase demand for battery operated cars.

China and the U.S. decided to review investment criteria for both and within two countries as China looks for ways to allocate its growing foreign exchange reserve. The reserve of $1.5 trillion and growing is also losing its purchasing power as dollar declines in the international currency markets and investment barriers in the U.S. restrict its investment options.

North American Markets indexes

Dow Jones Industrial Average dropped 131.24 or 1.08% to a close of 12,029.06, S&P 500 closed down 13.12 or 0.97% to 1,337.81, and Nasdaq Composite Index decreased 28.02 or 1.14% to close at 2,429.71. In Toronto TSX Composite closed up 4.30 or 0.03% to 15,073.13.

Of the 30 stocks in Dow Jones Industrial Average 4 gained and 26 declined.

Merck led advancers in the Dow Jones Industrial Average with a rise of 0.52% followed by rises in Boeing of 0.36%, in Pfizer Inc of 0.28%, and Verizon Communication of 0.25%.

General Motors led decliners in the Dow Jones index with a fall of 5.9% followed by losses in Bank of America of 2.98%, in American International Group of 2.35%, in General Electric of 2.25% and Johnson & Johnson of 1.50%.

Of the stocks in S&P 500 index, 94 increased, 402 declined, and 4 were unchanged. Of the index stocks 7 increased more than 3% and 54 declined more than 3%.

Console Energy led advancers in the S&P 500 index with a rise of 7.34% followed by increase in Peabody Energy of 5.15%, in Union Pacific of 4.6%, in Precision Castparts of 3.7% and in General Mills of 3.1%.

Fifth Third Corp. led decliners in the S&P 500 index with a drop of 27% followed by losses in Regions Financials of 11%, in Huntington Banc of 9.51%, in SunTrust of 9% and in Tyson Foods of 7.32%.

European Markets indexes

European stocks lost ground slipping gains recorded yesterday, the key indices in Germany and France closed lower.

The CAC 40 retreated 1.65% to 4,608.96 In Germany the DAX 30-index fell 73.52 points or 1.08% to 6,722.64. Shares in Switzerland lost as the Swiss Market index fell 93.96 points or 1.30% to 7,157.46. The FTSE 100 slipped 116.00 points or 1.98% to 5,745.90.

South American Markets Indexes

Peru led advancers in the Latin American markets with a rise of 0.79% followed by rises in Argentina of 0.59%, in Chile of 0.40%, and Venezuela of 0.15%.

Brazil led decliners with a fall of 1.97% followed by losses in Colombia of 1.19%, and Mexico of 1.02%.

Asian markets

In Tokyo Nikkei 225 Index closed higher 104.45 or 0.73% to 14,452.82, in Hong Kong Hang Seng index increased 267.81 or 1.16% closed to 23,325.80. In Australia ASX 200 index higher 20.50 or 0.38% to close 5,443.20. In Malaysia KL Composite index decreased 15.17 or 1.24% closed to 1,212.59.

In South Korea Kospi Index increased 23.42 or 1.34% to close at 1,774.13, in Thailand SET index closed lower 11.43 or 1.47% to 765.74 and Indonesia JSE Index edged decreased 13.40 or 0.56% to 2,364.58. Sensex index in India decreased 274.59 or 1.75% to 15,422.31.

Commodities, Metals, and Currencies

Crude oil increased $2.32 to close at $136.33 a barrel for a front month contract, natural gas increased 32 cents to $13.27 per mBtu, and gasoline futures increased 4.61 cents to close at 346.40 cents per gallon.

Gold increased $6.60 in New York trading to close at $893.50 per ounce, silver closed up 26.5 cents to $17.34 per ounce, and copper for front month delivery increased 9.70 cent to $3.74 per pound.

Wheat futures increased 5.70 cent in Chicago trading and closed at $9.22 per bushel. Sugar increased 46 cent to $12.89 per pound. Soybean future closed down 10.00 cents to $15.43 a bushel.

Dollar edged lower and traded near record low against euro to $1.5535 and fell against yen to 107.88.

Yields on U.S. bonds decreased to 4.13% with 10 years of maturities and decreased to 4.71% with 30-year of maturities.