Fannie, Freddie Sell-Off; Weak Financials

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

Financial stocks fell sharply after the talks of another capital needs at two mortgage agencies Fannie Mae and Freddie Mac. The new accounting rule may require more debt to be consodilated on the balance sheet and force two largest mortgage agencies to raise as much as $75 billion in new capital according to Lehman analyst. Banks and financial brokerage stocks dropped. Euorpean stocks closed higher but Asian stocks continue to struggle in the early morning trading in the region.

10:30PM New York, 7:30AM Frankfurt, 12:30PM Sydney[R]– A sharp drop in Fannie Mae and Freddie Mac sparked another round of sell-off in financial stocks.[/R]

North American Markets indexes

Dow Jones Industrial Average decreased 56.58 or 0.50% to a close of 11,231.96, S&P 500 closed down 10.59 or 0.84% to 1,252.31, and Nasdaq Composite Index decreased 2.06 or 0.09% to close at 2,243.32. In Toronto TSX Composite closed down 297.59 or 2.12% to 13,712.80.

Of the 30 stocks in Dow Jones Industrial Average 13 stocks gained and 17 declined.

Alcoa led the gainers in the Dow Jones Index with a rise of 1.9% followed by increases in IBM of 1.6%, in Hewlett Packard of 1.30%, in General Motors of 1.2%, in Caterpillar of 0.71% and in General Electric of 0.7%.

Merck & Company led the decliners in the Dow Jones Index with a loss of 4.8% followed by losses in Bank of America of 3.9%, in JP Morgan Chase of 3.6%, in Walt Disney of 2.7% and in Citigroup of 2.5%.

Of the stocks in S&P 500 index, 169 increased, 323 declined and 8 rose. Of the index stocks 10 stocks rose more than 3% and 80 fell more than 3%.

Freddie Mac led the decliners in the S&P 500 index with a loss of 18% followed by declines in MGIC Investment Corp of 17.7%, in Fannie Mae 16.2%, in Marshall & Ilsley of 11.6%, in First Horizon of 11.3% and in Verisign Inc of 9.5%.

Yahoo Inc led the gainers in the S&P 500 index with a rise of 12.0% followed by gains in Broadcom Corp of 7.2%, in International Game Technology of 6.5%, in Nucor Corp of 5.6%, in NetApp Inc of 5.5% and in RadioShack Corp of 4.9%.

South American Markets Indexes

Argentina led the decliners in the Latin American markets with a loss of 2.55% followed by losses in Colombia of 1%, in Peru of 0.57%, in Brazil of 0.47%.

Chile led the gainers in the region with a rise of 1% followed by increases in Venezuela of 0.3% and in Mexico of 0.16%.

European Markets Indexes

The CAC 40 added 76.59 or 1.80% to 4,342.59. In Germany the DAX 30 index increased 123.54 or 1.97% to 6,395.75. Swiss Market index added 42.99 to 6,815.73. The FTSE 100 index closed up 99.90 or 1.85% to 5,512.70.

Asian markets

The Nikkei 225 Index in Tokyo closed higher 122.15 or 0.92% to 13,360.04, Hang Seng index in Hong Kong increased 489.24 or 2.28% closed to 21,931.06. ASX 200 index in Australia increased 79.60 or 1.57% to close 5,002.50. The KL Composite index in Malaysia decreased 6.88 or 0.61% closed to 1,127.26.

The Kospi Index in South Korea increased 1.78 or 0.11% to close at 1,579.72, SET index in Thailand closed lower 12.47 or 1.68% to 730.56 and JSE Index in Indonesia decreased 10.93 or 0.47% to 2,303.82. The Sensex index in India increased 71.99 or 0.54% to 13,525.99.

Commodities, Metals, and Currencies

Crude oil decreased $4.57 to close at $140.77 a barrel for a front month contract, natural gas closed down to 5 cents to $12.92 per mBtu, and gasoline futures increased 73.16 cents to close at 349.00 cents per gallon.

Gold increased $0.70 in New York trading to close at $929.50 per ounce, silver closed up 0.015 cents to $17.93 per ounce, and copper for front month delivery increased 0.60 cent to $3.85 per pound.

Wheat futures increased 3.50 cent in Chicago trading and closed at $8.39 per bushel. Sugar decreased 39 cent to $13.5 per pound. Soybean future closed down 15.75 cents to $15.45 a bushel.

Dollar edged higher and traded near record low against euro to $1.5696 and rose against yen to 107.16.

Yields on U.S. bonds decreased to 3.91% with 10 years of maturities and decreased to 4.49% with 30-year of maturities.