Late Rally Lifts U.S. Stocks

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

Early struggle in U.S. market indexes turned into a late rally with financials and airlines closing higher and crude oil futures losing another 2%. Investors set aside recent losses at banks and other financial companies and bid up stocks. Tech stocks closed higher despite disappointment to some investors on 31% increase in earnings at Apple Inc. SanDisk plunged after it reported 1% decline in sales and a quarterly loss. Yahoo after the close reported lower earnings.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Early struggle in the U.S. benchmark indexes turned late rally as optimistic investors set aside the recent losses at large bank.[/R]

Global Markets Update

U.S. stocks closed higher after a struggle in the early morning on a large loss from Wachovia Corp, less than expected earnings gains at Apple and disappointing outlook at American Express.

U.S. stock futures edged lower in the pre-market trading after a large loss at Wachovia Bank, surprise fall in earnings at American Express and 31% earnings rise at Apple Inc. the troubled bank also cut its dividend by 87% and proposed to eliminate nearly 6,400 jobs. In addition, American Express, the credit card lender reported 8% rise in sales and 38% fall in earnings. Canadian National Railway second quarter revenue rose 4% but net income declined 11%.

U.S. stocks struggled in the early afternoon as investors digest a barrage of earnings. American Express second quarter earnings fell 38% on 8% rise in sales. SanDisk plunged 25% after it reported second quarter revenue decline and a loss in the quarter. The company will also delay start of new fabrication facility to lower the supply of storage products in the market. Assured Guaranty plunged 47% after credit rating agency Moody’s may review its credit rating.

North American Markets indexes

Dow Jones Industrial Average increased 135.16 or 1.2% to a close of 11,602.50, S&P 500 closed up 17.00 or 1.35% to 1,277.00, and Nasdaq Composite Index increased 24.43 or 1.07% to close at 2,303.96. In Toronto TSX Composite closed down 46.00 or 0.34% to 13,643.19.

Of the 30 stocks in Dow Jones Industrial Average 21 stocks gained, 8 declined and 1 was unchanged.

Merck & Company led the decliners in the Dow Jones Index for the second day in a row with a fall of 11.3% followed by decreases in American Express of 7.1%, in Chevron Corp of 1.5%, in Verizon Communication of 1.4%, in Walt Disney Company of 0.3% and in Alcoa of 0.24%.

Bank of America led the gainers in the Dow Jones Index with a rise of 13.3% followed by increases in General Motors of 9.4%, in Citigroup of 6.1%, in AIG of 6.07% and in JP Morgan Chase of 5.72%.

Of the stocks in S&P 500 index, 366 increased, 131 declined and 3 were unchanged. Of the index stocks 156 stocks rose more than 3% and 41 fell more than 3%. Twenty stocks rose more than 10%.

SanDisk Corp led the decliners in the S&P 500 index with a loss of 24.1% followed by declines in Texas Instrument of 14.6%, in Merck of 11.3%, in Boston Scientific of 11.01%, in Massey Energy of 9.54%, in Micron Technology of 9.3% and in Chesapeake Energy of 8.5%

Wachovia Corp led the gainers in the S&P 500 index with a rise of 27.4% followed by gains in First Horizon of 16.21%, in SunTrust Banks, Inc of 16.2%, in Legg Mason of 13.6%, in Huntington Banc shares Inc of 13.4% and in Bank of America of 13.2%.

South American Markets Indexes

Brazil led decliners in the Latin American markets with a fall of 1.85% followed by decreases in Peru of 1.7%, in Mexico of 1.42%, in Argentina of 1.26%, in Venezuela of 1.12% and in Colombia of 0.85%. Chile gained 0.9%.

Europe Markets Review

In London FTSE 100 Index closed lower 40.20 or 0.74% to 5,364.10, in Paris CAC 40 Index increased 0.12 or 0.00% to close at 4,327.26 and in Frankfurt DAX index higher 17.95 or 0.28% to close at 6,442.79. In Zurich trading SMI increased 64.03 or 0.93% to close at 6,922.25.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 381.26 or 2.98% to 13,184.96, Hang Seng index in Hong Kong decreased 5.42 or 0.02% closed to 22,527.48. ASX 200 index in Australia decreased 6.20 or 0.12% to close 5,005.60. The KL Composite index in Malaysia increased 6.09 or 0.55% closed to 1,109.57.

The Kospi Index in South Korea decreased 1.69 or 0.11% to close at 1,561.23, SET index in Thailand closed lower 5.15 or 0.75% to 682.15 and JSE Index in Indonesia increased 17.69 or 0.81% to 2,212.75. The Sensex index in India increased 254.16 or 1.84% to 14,104.20.

Commodities, Metals, and Currencies

Crude oil decreased $3.39 to close at $128.43 a barrel for a front month contract, natural gas closed down 40 cents to $10.11 per mBtu and gasoline futures decreased 7.25 cents to close at 314.46 cents per gallon.

Gold decreased $15.20 in New York trading to close at $948.50 per ounce, silver closed down 42 cents to $18.005 per ounce and copper for front month delivery increased 0.95 cent to $3.69 per pound.

Wheat futures increased 5.75 cent in Chicago trading and closed at $7.96 per bushel. Sugar decreased 47 cent to $12.01 per pound. Soybean future closed up 6.00 cents to $14.09 a bushel.

Dollar edged higher and traded near record low against euro to $1.5783 and rose against yen to 107.315.

Yields on U.S. bonds increased to 4.10% with 10 years of maturities and increased to 4.66% with 30-year of maturities.