Stocks, Oil, Gold Fall, Fed Wants Bigger Role

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

tU.S. stocks edge higher in the trading afer wholesale sales rise in May. Commodities prices fell for the second day with a sharp decline in crude oil, natural gas and base metal prices. The Federal Reserve chief Bernanke proposes to widen the Fed role and increase lending to financial brokerage firms. Fannie Mae and Freddie Mac may not have to seek additional capital according to the regulator that regulates two mortgage lenders. Asian markets fell sharply in the overnight trading.

[R]10:45AM New York – U.S. stocks edge higher but stocks in the consumer and energy sectors declined.[/R]

U.S. stocks in the morning trading eked out small gain after wholesale sales rose 1.6% in May from a year ago and edged up only 0.2% from May.

Commodities prices fell in the morning trading after Middle East war rhetoric cooled. Israel with a tacit support from the U.S., prepares to attack Iran but appears to pursue diplomatic route. Iran is increasingly under pressure with the U.S. military presence in Iraq and Afghanistan. Crude oil declined $4.54 to $136.83 and natural gas fell 44 cents to $12.53. Near moth gold futures prices fell $6.60 to $922.20.

Consumers driven stocks fell on the worries that economic slow-down and rising food and fuel prices will cut disposable income. Master Card Inc ((MA)) dropped $7.41 to $238.36 and Visa Inc ((V)) dropped $2.68 to $72.91.

VMWare ((VMW)) stock plunges $16.45 to $36.79 after its chief executive resigned and the company lowered its sales outlook.

Fannie Mae and Freddie Mac declined further after losing more than 15% on the worries related to new accounting rules. The soon to be implemented rule will require the two mortgage agencies to bring most of the off-balance sheet liabilities on the books and may force them to seek additional capital. James Lockhart, director of OfHEO, a regulator that oversees the two lenders said at a conference that the government may not seek the firms to raise additional capital.

Fannie Mae stock ((FNM)) fell 45 cents to $15.30 and Freddie Mac ((FRM)) stock rose 10 cents to $12.03.

A drop in energy prices dragged coal miners lower for the second day in a row. Patriot Coal stock ((PCX)) fell $14.81 to $114, Peabody Energy declined $4.49 to $72.65 and Arch Coal Inc dropped $3.88 to $59.47.

The Pepsi Bottling Group, Inc, beverages bottling company reported second quarter revenues increased 5% to $3.52 billion from $3.36 billion a year ago. Net income in the quarter rose 7% to $174 million or 78 cents per diluted share compared to net income of $162 million or 70 cents per share, a year ago.

The Pepsi Bottling Group, Inc ((PBG)) in the last one year traded as high as $43.38 in October 2007 and as low as $27.26 in July 2008. Based on the yesterday’s closing price the company has a market cap of $6.26 billion.

The Greenbrier Companies, Inc, a supplier of transportation equipment and services to the railroad industry reported third quarter revenues down 1.2% to $382.1 million from $386.6 million a year ago. Net income in the quarter fell 38% to $8.1 million or 49 cents per diluted share compared to net income of $13 million or 81 cents per share, a year ago.

The Greenbrier Companies, Inc ((GBX)) in the last one year traded as high as $38.99 in July 2007 and as low as $16.03 in January 2008. Based on the yesterday’s closing price the company has a market cap of $309.98 million.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 326.94 or 2.45% to 13,033.10, Hang Seng index in Hong Kong decreased 692.25 or 3.16% closed to 21,220.81. ASX 200 index in Australia decreased 69.60 or 1.39% to close 4,932.90. The KL Composite index in Malaysia decreased 6.01 or 0.53% closed to 1,121.25.

The Kospi Index in South Korea decreased 46.25 or 2.93% to close at 1,533.47, SET index in Thailand closed lower 8.06 or 1.10% to 722.50 and JSE Index in Indonesia decreased 24.84 or 1.08% to 2,278.97. The Sensex index in India decreased 176.34 or 1.30% to 13,349.65.