Dow, Nasdaq Down 20%

123jump.com Staff
02 Jul, 2008
New York City

U.S. stocks fell shaprly as investors feared recession, higher fuel and energy prices and weakening corporate profits. Cyclical stocks of miners, steel makers and industrial companies fell. Coal miners, Peabody and Massey Energy plunged. Transportation stocks fell on record price in crude oil and a prospect of higher energy prices in the near future. Airlines, railroads and freight companies declined. European markets closed lower. Brazil, Canda and Argentina closed down 3% or more.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– General Motors financial health is the latest addition to a long list of worries that investors face. Rising inflation and elevated crude oil price dragged market averages lower again.[/R]

Global Markets Update

U.S. stocks fell sharply after comments from Merrill Lynch suggested that General Motors may need larger than estimated cash infusion as sales and cash flow declines at a raid rate. The comments sent General Motors stocks 13% lower and dragged market averages down. Crude oil rebounded after the release of weekly inventory data that showed a decline in inventories. Coal miners Massey Energy, Peabody and steel companies fell sharply in trading.

UK based retailer, Marks & Spencer dropped 24% after it reported same store sales declined 5.3% in the UK. The company warned that earnings will be revised on the lower sales in the UK. Other retailers fell sharply and dragged benchmark index lower. Taylor Wimpey, home builder announced that it will cut its dividend and take a write-off of £660 million. The home builder forecasted weak housing market till 2009 and also failed to attract new capital. Stock dropped as much as 46%.

Stocks in India rebounded sharply on the hopes that a political settlement can be reached between Congress led UPA ruling coalition and a regional party. The prospect of alliance between Congress and Samajwadi Party lifted Sensex index up 5.4%. Banks, real estate and industrial companies participated in the rally. DLF rallied 15% after the company will decide to buy back stocks next week. Software services exporters rebounded as rupee has declined nearly 9% in the last two months.

Stocks in Japan are now in the longest losing streak in the last four decades. The bench market index Nikkei 225 has lost ground for the last trading days in a row. Continued worries related to the health of the U.S. and European banks and a sharp rise in crude oil prices and a fall in auto sales in the U.S., Japan and India dragged auto stocks lower. A 2.5% decline in Baltic Dry Index that tracks ocean freight rates dragged shipping companies lower. Toyota, Honda, Nissan and Suzuki fell.

North American Markets indexes

Dow Jones Industrial Average decreased 166.75 to a close of 11,215.51, S&P 500 closed down 23.39 or 1.82% to 1,261.52, and Nasdaq Composite Index decreased 53.51 or 2.32% to close at 2,251.46. In Toronto TSX Composite closed up 432.92 or 2.99% to 14,034.11.

Of the 30 stocks in Dow Jones Industrial Average 6 stocks gained and 24 declined.

General Motors led the decliners in the Dow Jones Industrial Average with a loss of 15% followed by losses in Alcoa Inc of 6.8%, Bank of America of 5.3%, in Caterpillar of 4.95% and in Microsoft of 3.7%.

JP Morgan Chase led the gainers in Dow Jones Index with a rise of 1.7% followed by gains in Procter & Gamble of 1.2%, in Coca-Cola of 0.7% and in Verizon Communication of 0.3%.

Of the stocks in S&P 500 index, 85 increased 415 declined. Of the index stocks 8 stocks rose more than 3% and 150 fell more than 3%.

Massey Energy led the decliners in the S&P 500 index with a loss of 19% followed by losses in General Motors of 15%, in Consol Energy of 14.6%, in Nucor Energy of 14.3%, in AK Steel of 13.6%, in US Steel of 12.5%, in Allegheny Technology of 9.3% and in Peabody Energy of 9.3%.

Apollo Group led the gainers in the S&P 500 index with a rise of 18.4% followed by gains in Family Dollar of 8%, in Lehman Brothers of 6.7%, in SanDisk of 6.2%, in Fiserve Inc of 5.4% and in Yahoo! of 0.7%.

South American Markets Indexes

Brazil and Chile led decliners in Latin American markets with a fall of 3.60% followed by decreases in Argentina of 2.99%, in Peru of 2.8% and in Mexico of 1.86%. Venezuela gained 0.4%.

European Markets Indexes

The CAC 40 fell 44.73 or 1.03% to 4,296.48. In Germany the DAX 30 index dropped 10.52 or 0.17% to 6,305.42. Swiss Market index declined 5.92 or 0.09% to 6,843.75. The FTSE 100 closed lower 53.60 or 0.98% to 5,426.30.

Asian markets

In Tokyo Nikkei 225 Index closed lower 176.83 or 1.31% to 13,286.37, in Hong Kong Hang Seng index decreased 397.56 or 1.80% closed to 21,704.45. In Australia ASX 200 index lower 44.10 or 0.86% to close 5,094.80. In Malaysia KL Composite index decreased 21.13 or 1.80% closed to 1,153.70.

In South Korea Kospi Index decreased 42.86 or 2.57% to close at 1,623.60, in Thailand SET index closed lower 8.58 or 1.12% to 760.01 and Indonesia JSE Index edged decreased 0.33 or 0.01% to 2,378.47. Sensex index in India increased 702.94 or 5.42% to 13,664.62.

Commodities, Metals, and Currencies

Crude oil increased $2.88 to close at $143.85 a barrel for a front month contract, natural gas decreased 10 cents to $13.41 per mBtu, and gasoline futures increased 4.21 cents to close at 355.50 cents per gallon.

Gold increased $2.00 in New York trading to close at $946.50 per ounce, silver closed up 14.00 cents to $18.42 per ounce, and copper for front month delivery increased 15.30 cent to $4.06 per pound.

Wheat futures increased 15.50 cent in Chicago trading and closed at $8.80 per bushel. Sugar increased 26 cent to $13.98 per pound. Soybean future closed up 20.00 cents to $16.30 a bushel.

Dollar edged lower and traded near record low against euro to $1.5882 and rose against yen to 105.92.

Yields on U.S. bonds decreased to 3.97% with 10 years of maturities and decreased to 4.51% with 30-year of maturities.