Refiners, Transportation Stocks Lead Reversal

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

U.S. stocks rebounded in the afternoon trading as crude oil fell to near $100 a barrel and natural gas declined. Optimist traders hoped that Lehman Brothers will find a buyer for its assets or key investors, which increasingly looks unlikely. Lehman fell 41%. Railroad operator CSX lifted its earnings estimate. Separately, Brazil raised its interest rate to 13.75% in a split decision. Gold dropped 2% and lost 6% in two days and has lost 11% for the year. European markets closed lower.

5:00PM New York, 11:00PM Frankfurt, 7:00AM Sydney[R]– U.S. stocks rebounded in the afternoon trading as crude oil futures declined near $100 a barrel. Natural gas fell. Gold dropped 2% after losing 4% a day ago. Brazil raised its rate to 13.75% after a split decision, fourth rate hike this year.[/R]

Global Markets

U.S. stocks edged lower after analysts lowered their views on Lehman Brothers. The troubled broker lost 40% after it fell 45% in the previous session. Trade deficit in July increased as exports and imports both increased. The elevated crude oil imports and persistent deficit with Asian nations contributed to the high deficit. Initial jobless claims for the week ended Sept 6 declined to 445,000 from a revised 451,000 at the end of the prior week.

Stocks in UK declined, as investors focused on the weak economy and struggling consumers. The benchmark index FTSE 100 declined for the third day in a row and dropped 47.80 or 0.9% to 5,318.40. For the year the index has declined 18% as most European markets have fallen more than 15% in the period. Home Retail Group dropped 5.7% or 13.75 to 228 pence after it reported same stores sales decline in the second quarter.

Sensex in India dropped on the developing nations’ financial system weakness and continued worries on the health of the global markets. The benchmark indexes Sensex and CNX Nifty declined 2.3% and 2.5% respectively dragged by a fall in energy, realty and financial sectors. After the close inflation report showed a slight decline from the previous weekly read. Reliance fell below 2,000 rupees for the second time this year after the worries that exports from the refinery may be banned.

Brazil market index surged 3.3% after the central bank increased its key lending rate by 75 basis points to 13.75% in a 5-3 vote decision. The Bovespa Index rose after the market indexes in New York reversed their earlier losses.

Gold has declined 28% from its peak in March and for the first time drops below $750 in the year. The yellow metal which generally benefits from the global stock and bond market weakness has not been the favorite of investors, despite a steady rise in inflation. The sharp reversal in sentiment in favor of the U.S. dollar has dragged all precious metals lower in the last five months. Silver prices are at a 2-year low and platinum price has fallen 45% from the high of $2,021 in March of this year to $1,142 an ounce.

North American Markets

Dow Jones Industrial Average increased 164.79 or 1.46% to a close of 11,433.71, S&P 500 Index closed up 17.01 or 1.38% to 1,249.05, and Nasdaq Composite Index increased 29.52 or 1.32% to close at 2,258.22. In Toronto TSX Composite closed up 115.61 or 0.93% to 12,612.76.

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

General Motors led gainers in the Dow Jones Industrial Average with a rise of 11.65% followed by increases in JP Morgan Chase of 5.7%, Microsoft Corp 3.4%, Caterpillar Inc of 3.2% and DuPont of 2.45%.

Citigroup led the decliners in the Dow Jones Industrial Average with a loss of 0.37% followed by loss in Johnson & Johnson of 0.1%.

Of the stocks in S&P 500 index, 384 increased, 109 declined and 5 were unchanged. Of the index stocks, 77 rose more than 3% and 15 fell more than 3%.

Wamu Inc led the gainers in the S&P 500 index with a rise of 22% followed by gains in Sunoco Inc of 12.38%, in General Motors of 11.65%, in Allergan Inc 10.90%, in CSX Corp of 10.66% and in Tesoro Corp of 9.30%.

Lehman Brothers led decliners in the S&P 500 index with a plunge of 42% followed by losses in Merrill Lynch of 16.61%, in Dillard’s Inc of 5.60%, in MEMC Electric Material of 5.52%, in Wachovia Corp of 5.31%, in Nvidia of 4.8% and in SLM Corp of 4.7%.

Joy Global Inc surged 9% after it increased its share repurchase program to $2 billion. CSX rose 9% after it lifted its earnings outlook for the year and beyond. Kenexa Corporation dropped 27% after it lowered its revenue and earnings guidance for the quarter and the year. FactSet, a financial data service provider fell 2% after it was dropped from a small cap index.

South American Markets Indexes

Brazil led gainers in the region for the second day in a row with a rise of 3.30% followed by increases in Colombia of 1.4%, in Argentina of 0.52% and in Chile of 0.33%.

Venezuela led decliners in the region with a fall of 0.47% followed by decreases in Mexico of 0.27% and in Peru of 0.13%.

Europe Markets Review

In London FTSE 100 Index closed lower 47.80 or 0.89% to 5,318.40, in Paris CAC 40 Index decreased 34.59 or 0.81% to close at 4,249.07 and in Frankfurt DAX index lower 31.42 or 0.51% to close at 6,178.90. In Zurich trading SMI decreased 50.18 or 0.70% to close at 7,071.25.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 244.13 or 1.98% to 12,102.50, Hang Seng index in Hong Kong decreased 611.06 or 3.06% closed to 19,388.72.ASX 200 index in Australia decreased 91.20 or 1.86% to close 4,814.30. The KL Composite index in Malaysia decreased 21.04 or 2.04% closed to 1,041.07.

The Kospi Index in South Korea decreased 21.74 or 1.48% to close at 1,443.24, SET index in Thailand closed lower 8.74 or 1.33% to 646.80 and JSE Index in Indonesia decreased 14.91 or 0.79% to 1,870.13. The Sensex index in India decreased 338.32 or 2.31% closed to 14,324.29.

Commodities, Metals, and Currencies

Crude oil decreased $2.13 to close at $100.45 a barrel for a front month contract, natural gas decreased 22 cent to $7.18 per mBtu and gasoline futures increased 8.81 cents to close at 274.97 cents per gallon.

Gold decreased $19.10 in New York trading to close at $743.90 per ounce, silver closed down $0.37 cents to $10.51 per ounce and copper for the front month delivery increased 0.40 cent to $3.11 per pound.

Gold has declined 11% in the year and is likely to decline further as precious metal investors switch to the U.S. dollar. The gold reached its 27-year peak in March to 1,033 an ounce and since then fallen 28%.

Wheat futures closed up 0.50 cents in Chicago trading and closed at $7.26 a bushel. Sugar decreased 0.27 cent to 13.61 cents a pound. Soybean future closed down 2.00 cents to $11.76 a bushel.

Dollar edged higher against euro to $1.3944 and edged lower against yen to 106.95.

Yields on U.S. bonds were unchanged to 3.63% with 10 years of maturities and decreased to 4.21% with 30-year of maturities.