U.S. Indexes Fall 3%, World Markets Follow

123jump.com Staff
04 Sep, 2008
New York City

The U.S. benchmark indexes fell 3% on weaker than expected retail stores and a surprise increase in unemployment claims. Of the stocks in the S&P 500 index, 475 declined and 22 increased. Nearly 50% of the stocks in the index dropped more than 3%. Markets in Europe, South America and Canada dropped sharply as well. The ECB and BoE left key lending rates unchanged but Sweden increased its rate. Brazil led the decliners in Latin markets for the fourth day in a row and fell 4%.

4:00PM New York, 10:00PM Frankfurt, 6:00AM Sydney[R]– U.S. benchmark indexes fell 3% on weaker than expected retail stores and a surprise increase in unemployment claims. Markets in Europe, South America and Canada dropped sharply as well. The ECB and BoE left key lending rates unchanged but Sweden increased its rate.[/R]

Global Markets Update

U.S. stocks fell sharply after retailers reported mixed same store sales. Benchmark indexes dropped nearly 3% as tech, retailers and energy stocks fell. Crude oil declined. Non-farm productivity rose at 4.3% in the second quarter compared to 3.4% rise in the quarter a year ago. Discounters reported rising same store sale in August but at apparel retailers sales declined. Ciena fell 20% after it forecasted weak sales growth for the year. Weekly unemployment claims at the end of the last week rose 15,000, surprising market watchers.

The ECB and the BoE left key rates unchanged. Central bankers in the region are fighting rising inflation and falling growth rates. Economies in the euro-zone and in UK are facing recessionary trends and a decline in retail sales. Sweden raised its key lending rate by 0.25% to 4.75% to combat rising inflation in food and energy prices. The U.S. dollar rose against euro and British pound after the rate decision.

Stocks in Mumbai trading fell as investors seek to take profit after a recent surge of benchmark by 10%. The fall in crude oil prices had powered the recent rebound in indexes and widely held stocks. Tata hopes to launch much anticipated small car Nano on or near initial launch schedule despite daily demonstration at its plant in West Bengal. UCO Bank plans to raise 600 crore rupees by the end of this year.

North American Markets

Dow Jones Industrial Average decreased 344.65 or 2.99% to a close of 11,188.23, S&P 500 Index closed down 37.89 or 2.97% to 1,237.09, and Nasdaq Composite Index decreased 74.69 or 3.20% to close at 2,259.04. In Toronto TSX Composite closed down 323.58 or 2.46% to 12,814.14.

Of the 30 stocks in Dow Jones Industrial Average 1 stock gained, 29 declined and one was unchanged.

Bank of America led decliners in Dow Jones Industrial Average with a loss of 7.16% followed by losses in Citigroup Inc of 6.7%, in AIG 6.02% and in Caterpillar Inc of 5.60%. American Express and General Motors dropped more than 5% and Intel declined more than 4%.

The lone gainer in the index was Coca-Cola Company with an increase of 0.1%.

Of the stocks in S&P 500 index, 22 increased, 475 declined and 3 were unchanged. Of the index stocks, 3 rose more than 3% and 242 fell more than 3%.

Range Resources led the gainers in the S&P 500 index with a rise of 5.55% followed by gains in King Pharmaceuticals of 5.5%, in Family Dollar of 3.10%, in Apollo Group of 2.70%, in Apache Corp of 2.4% and in Expedia Inc of 2.06%.

Ciena Corp led decliners in the S&P 500 index with a loss of 24.90% followed by losses in Terex Corp of 19.65%, in Fannie Mae of 12.3%, in AK Steel Holdings of 11.09%, in Lehman Brothers of 10.5%, in Verisign Inc of 10.2% and in Legg Mason of 10.07%.

South American Markets Indexes

There were no gainers in the region.

Brazil led decliners in the region for the fourth day in a row with a loss of 3.96% followed by decreases in Peru of 2.12%, in Argentina of 3.61% in Chile of 1.72%, in Mexico of 1.19% and in Venezuela of 0.09%.

Europe Markets Review

In London FTSE 100 Index closed lower 137.60 or 2.50% to 5,362.10, in Paris CAC 40 Index decreased 143.12 or 3.22% to close at 4,304.01 and in Frankfurt DAX index lower 187.92 or 2.91% to close at 6,279.57. In Zurich trading SMI decreased 171.98 or 2.37% to close at 7,084.65.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 131.93 or 1.04% to 12,557.66, Hang Seng index in Hong Kong decreased 195.58 or 0.95% closed to 20,389.48.ASX 200 index in Australia decreased 80.50 or 1.59% to close 4,979.50. The KL Composite index in Malaysia decreased 0.32 or 0.03% closed to 1,085.06.

The Kospi Index in South Korea decreased 0.46 or 0.03% to close at 1,426.43, SET index in Thailand closed higher 4.92 or 0.76% to 654.85 and JSE Index in Indonesia decreased 40.77 or 1.93% to 2,075.23. The Sensex index in India decreased 150.76 or 1.00% closed to 14,899.10.

Commodities, Metals, and Currencies

Crude oil decreased $1.37 to close at $107.98 a barrel for a front month contract, natural gas closed increased 8 cent to $7.35 per mBtu and gasoline futures decreased 3.53 cents to close at 273.15 cents per gallon.

Gold decreased $6.90 in New York trading to close at $801.30 per ounce, silver closed down $0.07 cents to $12.880 per ounce and copper for the front month delivery decreased 4.85 cent to $3.26 per pound.

Wheat futures closed up 2.25 cents in Chicago trading and closed at $7.77 a bushel. Sugar decreased 0.14 cent to 12.65 cents a pound. Soybean future closed down 16.50 cents to $12.35 a bushel.

Dollar edged higher against euro to $1.4328 and edged higher against yen to 107.019.

Yields on U.S. bonds decreased to 3.63% with 10 years of maturities and decreased to 4.27% with 30-year of maturities.