AIG, Allianz Weak, Retailers Fall

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

U.S. stocks fell on further weakness in financial companies and a drop in earnings from Toyota, Martin Marietta Materials, Cardinal Health, Atlas Air Worldwide, Fortress Investments Group. Retailers reported mixed same store sales with Target sales declining and Wal-Mart issuing a conservative outlook for August.

[R]1:00 PM New York – U.S. stocks fell on mounting evidence of further weakness in financial services related companies including AIG, Allianz, PMI Group and others. Crude oil prices edged higher. Toyota Motor reported a decline in earnings.[/R]

Dow Jones Industrial Average fell 94.38 or 0.97% to 11,567.69 and S&P 500 fell 8.29 or 0.96% to 1,280.90.

Stock Movers

The worries related to financial system resurfaced today after a sharp loss from AIG. The wider than expected loss from the insurer and weaker than expected earnings from Toyota Motor dragged market averages lower in the morning trading. Retailers declined after mixed same-store sales reports from several companies and weaker than expected outlook from Target and Wal-Mart Stores.

Separately, the Bank of England left its key interest rate unchanged.

AIG ((AIG)) dropped 17% or $5.07 after it reported a loss of $5.36 billion or $2.06 a share on continued write down in mortgage related assets. The wider than expected loss sparked fears that the insurer will need to raise more capital and more losses are likely in the next two quarters. AIG reported its third consecutive quarterly loss after denying for months that it has exposure to risky mortgage loans and has adequate capital to run its business.

Wal-Mart Stores ((WMT)) dropped 3.3% or $1.97 to $58.80 after it reported same store sales rise of 3% in July and anticipated sales rise between 1% and 2% in August. The weaker than expected forecast dragged retailers lower.

Toyota Motor Corp ((TM)), the second largest automaker reported first quarter sales declined 4.7% to 6.22 trillion yen or $59.23 billion. Earnings dropped 28% to 353.7 billion yen or $3.18 billion compared to 491.5 billion yen. Earnings per share dropped to 112.28 yen per share compared to 153.89 yen a share on weaker sales in the U.S.

Cardinal Health Incorporated fell 5.5% to $51.52 after the second-largest U.S. distributor of prescription medicines reported net income declined to $326.6 million or 91 cents a share compared to $902.2 million or $2.33 a share a year ago. Excluding one-time charges the drug distributor reported earnings of 97 cents a share compared to 89 cents a year ago. The company forecasted earnings rise of only between 6% and 7% and is actively looking to sell its drug distribution business.

Cardinal Health Incorporated ((CAH)) in the last one year traded as high as $71.19 in August 2007 and as low as $49.23 in March 2008. Based on the yesterday’s closing price the company has a market cap of $18.94 billion.

Nationwide Financial Services Incorporated rose 9.3% to $50.75. Nationwide Mutual Insurance Company, the home and auto-insurer agreed to buy the part of Nationwide Financial that it does not own already for $2.4 billion in a bid to simplify the firm’s ownership structure.

Nationwide Financial Services Incorporated ((NFS)) in the last one year traded as high as $60.98 in October 2007 and as low as $37.42 in March 2008. Based on the yesterday’s closing price the company has a market cap of $7.03 million.

S&P Movers

Of the stocks in S&P 500 index, 61 increased 438 declined and 1 remained unchanged.

King Pharmaceutical led decliners in the S&P 500 index with a loss of 16.24% or $1.99 to $10.26 followed by losses in America International Group of 14.06% or $4.09 to $25.00, in Verisign Incorporated of 10.54% or $3.57 to $30.31, in Abercrombie & Fitch of 7.25% or $4.04 to $51.69 and in Lehman Brothers Holdings of 6.70% or $1.37 to $19.09.

Teradata Corporation led the gainers in the S&P 500 index with a rise of 10.00% or $2.29 to $25.18 followed by increases in J.C. Penney Company of 5.95% or $1.88 to $33.48, in Dillard’s Incorporated of 2.58% or $0.27 to $10.73, in Progress Energy of 1.91% or $0.81 to $43.14 and in Limited Brands of 1.84% or $0.31 to $17.20.

Dow Gainers & Losers

Of the 30 stocks in Dow Jones Industrial Average 3 stocks gained and 27 declined.

America International Group led the decliners in the Dow Jones Industrial Average with a loss of 14.03% or $4.08 to $25.01 followed by losses in Wal-Mart Stores of 3.72% or $2.26 to $58.50, in American Express of 2.87% or $1.09 to $36.90, in Bank of America of 2.09% or $0.70 to $32.75 and in Home Depot of 2.01% or $0.50 to $24.40.

Intel Corporation led the gainers in the Dow Jones Industrial Average index with a rise of 0.92% or $0.21 to $23.01 followed by increases in Chevron Corporation of 0.61% or $0.52 to $85.08 and in Exxon Mobil Corporation of 0.11% or $0.09 to $78.42.