Fannie, Freddie Plunge; Crude Oil Surges

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

U.S. stocks fell sharply on a sharp rise in crude oil prices and continued weakness in financial stocks. Rising tensions in the Mideast lifted crude oil futures to a record high. Fannie Mae Plunged 30% and Freddie Mac dropped 40% on the speculation that the government bailout plan may include shareholders. Citigroup sold its German consumer finance business to Credit Mutuel Group of France for 4.9 billion euros or $7.6 billion.

[R]9:45AM New York – Fannie and Freddie plunge on possibilities of a government bailout that will exclude shareholders. Crude oil surges for the second day.[/R]

Crude oil rose $5 for the second day in a row as talks of Israel attack on Iran intensified. Investors fear ongoing tensions in the Middle East region may lead to a military confrontation and disrupt oil and natural gas supply. Crude oil prices are now up nearly $10 a barrel as two nations increasingly appear to prepare for a confrontation.

Citigroup will sell its German consumer business to Credit Mutuel Group of France for 4.9 billion euros or $7.6 billion. The consumer finance unit has 340 branch locations and 3 million customers.

Fannie Mae and Freddie Mac trade at new lows as speculation mounts that government bailout plan may not include shareholders. Freddie Mac dropped $3.57 to $4.46 and Fannie Mae plunged $5.45 to $7.78. The weakness in two government chartered mortgage lending agencies dragged Lehman 17% lower or $2.80 to $14.40.

General Electric Company, a diversified technology, media and financial services company reported second quarter revenues increased 11% to $46.9 billion from $42.3 billion a year ago. Net income in the quarter declined 6.11% to $5.1 billion or 51 cents per diluted share compared to net income of $5.4 billion or 52 cents per share, a year ago.

General Electric Company ((GE)) in the last one year traded as high as $42.15 in August 2007 and as low as $26.15 in June 2008. Based on the yesterday’s closing price the company has a market cap of $275.50 billion. At the opening in today’s trading GE stock traded 43 cents higher to $28.08.

Fastenal Company a retailer of industrial and construction supplies reported second quarter sales increased 16.3% to $604.21 million from $519.70 million a year ago. Net income in the quarter increased 26.4% to $76.16 million or 51 cents per diluted share compared to net income of $60.25 million or 40 cents per share, a year ago.

Fastenal Company ((FAST)) in the last one year traded as high as $52.94 in May 2008 and as low as $32.27 in January 2008. Based on the yesterday’s closing price the company has a market cap of $6.78 billion. Fastenal stock in today’s trading dropped $1.17 to $44.27.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 27.52 or 0.21% to 13,039.69, Hang Seng index in Hong Kong increased 362.77 or 1.66% closed to 22,184.55. ASX 200 index in Australia increased 42.50 or 0.86% to close 4,979.90. The KL Composite index in Malaysia increased 14.90 or 1.31% closed to 1,150.39.

The Kospi Index in South Korea increased 30.08 or 1.96% to close at 1,567.51, SET index in Thailand closed higher 8.43 or 1.17% to 730.29 and JSE Index in Indonesia increased 0.62 or 0.03% to 2,276.85. The Sensex index in India decreased 456.39 or 3.28% to 13,469.85.