Oil Drops 4.5%, Stocks Rise 2.5%

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

Stocks in the U.S. rallied and in Europe edged higher after a steady decline in crude oil prices. Oil dropped 4.5% today and down 20% from its peak of $147 a barrel. Agriculture commodities, gold, silver and copper declined as well. Fannie Mae reported a loss on asset write down and cut its dividend by 80%. Royal Bank of Scotland reported a loss in the first half. Schroder profit declined 28%. Peru led the decliners in Latin markets. Telecom Italia profit fell 12% in the second quarter.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– Crude oil dropped more than 4% and sparked a rally in U.S. benchmark indexes. Royal Bank of Scotland and Fannie Mae reported losses. Schroder profit declined 28%.[/R]

Global Markets Update

U.S. stocks rallied after crude future fell 4.5% and gold declined 1.5%. Agriculture commodities fell between 2% and 7% and silver dropped 3%. The drop in oil sparked a rally in transportation and consumer stocks. Domtar Corp, the second largest paper producer reported better than expected earnings and forecasted higher profit margins. Hertz Global Holdings fell as much as 8% after it reported lower and earnings forecasted weak results for the rest of the year.

Fannie Mae, the troubled housing agency reported worst than expected results and indicated deepening problems in the housing market and for the company. The lender reported a loss of $2.3 billion or $2.54 a share compared to net income of $1.95 billion or $1.88 a share. Fannie also slashed its dividend 80% to 5 cents from 25 cents a share. In the UK, Royal Bank of Scotland reported its first loss in four decades after it wrote down £5.9 billion in assets.

Stocks in London rose fractionally after a steady decline in crude oil prices lifted airlines, retailers and transportations companies. However, miners fell after commodities prices declined. Of the 102 FTSE 100 stocks 72 rose, and 30 declined. British Airways led advancers in the index shares with a rise of 8.14% after crude oil prices for September delivery plunged 3.3% to $116.10 a barrel. Schroder profit fell 28% and RBS reported its first quarterly loss in four decades.

North American Markets indexes

Dow Jones Industrial Average increased 302.89 or 2.65% to a close of 11,734.32, S&P 500 closed up 30.25 or 2.39% to 1,296.32, and Nasdaq Composite Index increased 58.37 or 2.48% to close at 2,414.10. In Toronto TSX Composite closed down 43.43 or 0.32% to 13,341.74.

Of the 30 stocks in Dow Jones Industrial Average 28 stocks gained, 2 declined and none was unchanged.

Home Depot led gainers in the Dow Jones Industrial Average with a rise of 7.7% followed by increases in McDonald Corp of 6.2%, in Citigroup of 4.98%, in Boeing Company of 4.90% , in DuPont of 4.50% and in AIG and American Express of 4%.

IBM led decliners in Dow Jones Industrial Average with a loss of 0.19% followed by losses in Alcoa Inc of 0.13%.

Of the stocks in S&P 500 index, 442 increased, 57 declined and 1 was unchanged. Of the index stocks, 244 rose more than 3% and 20 fell more than 3%.

Sprint Nextel Company led the gainers in the S&P 500 index with a rise of 12% followed by gains in Qwest Communication of 11.08%, in Goodyear Tire of 10.58%, in Keycorp of 10.45%, in Dean Foods of 9.76% and in Macy’s Inc of 9.57%.

Fannie Mae led decliners in the S&P 500 index with a loss of 9.05% followed by losses in WaMu Inc of 7.8%, in AK Steel Holding of 5.41%, in Cameron international of 4.3%, in Southwestern Energy of 4.24%, in Devon Energy of 4.2% and in Baker Hughes Inc of 4.09%.

South American Markets Indexes

Peru led decliners in the Latin American markets with a fall of 3.98% followed by decreases in Argentina of 2.2%, in Brazil of 0.76%, in Venezuela of 0.66% and in Chile of 0.64%.

Mexico rose 0.54% and Colombia increased 0.48%.

Europe Markets Review

In London FTSE 100 Index closed higher 11.70 or 0.21% to 5,489.20, in Paris CAC 40 Index increased 34.42 or 0.77% to close at 4,491.85 and in Frankfurt DAX index higher 18.16 or 0.28% to close at 6,561.65. In Zurich trading SMI increased 80.03 or 1.11% to close at 7,262.10.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 43.42 or 0.33% to 13,168.41, Hang Seng index in Hong Kong decreased 218.99 or 0.99% closed to 21,885.21. ASX 200 index in Australia increased 2.90 or 0.06% to close 4,986.20. The KL Composite index in Malaysia decreased 9.25 or 0.82% closed to 1,120.31.

The Kospi Index in South Korea increased 4.72 or 0.30% to close at 1,568.72, SET index in Thailand closed lower 14.65 or 2.08% to 690.70 and JSE Index in Indonesia decreased 3.09 or 0.14% to 2,195.93. The Sensex index in India increased 50.57 or 0.33% to 15,167.82.


Commodities, Metals, and Currencies

Crude oil decreased $5.28 to close at $114.74 a barrel for a front month contract, natural gas closed down 25 cents to $8.31 per mBtu and gasoline futures decreased 12.03 cents to close at 288.24 cents per gallon.

Gold decreased $14.80 in New York trading to close at $863.10 per ounce, silver closed down 97 cents to $15.28 per ounce and copper for the front month delivery increased 9.60 cent to $3.32 per pound.

Wheat futures closed down 56.75 cents in Chicago trading and closed at $7.90 a bushel. Sugar decreased 0.23 cent to 13.56 cents a pound. Soybean future closed down 58.00 cents to $11.80 a bushel.

Dollar edged higher and traded near record low against euro to $1.5024 and edged higher against yen to 110.16.

Yields on U.S. bonds increased to 3.93% with 10 years of maturities and decreased to 4.54% with 30-year of maturities.