Stocks Rally, Broad Agreement o Bailout Plan

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

U.S. stocks rallied after lawmakers appear to agree on the broad framework of the bailout plan. The plan may release $250 billion immediately but will have the authority to invest up to $700 billion unless the Congress imposes limits at a later date. Markets in Europe and Brazil rise.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– U.S. stocks after lawmakers appear to make a progress on the broader outline of the bailout plan. Brazil surged 4%. European markets closed higher. Japan recorded its first deficit.[/R]

Global Markets

U.S. lawmakers appear to be in agreement for the giant bailout proposal that may take as much as $700 billion. The Bush administration plan, to purchase illiquid mortgages and pump money into banking system, will be one of the largest bailout plan ever carried out by any government. The lawmakers are still negotiating details on executive compensations limits, size of the plan, limits and oversight on the U.S. Treasury administration and rights of the troubles homeowners. The broad agreement between Democrat and Republicans appears on the rights of the government to participate in the future gains in the bank stocks and willingness to commit at least $250 billion immediately and release additional money at a later date. The details of the size of the plan are still sketchy.

General Electric lowered its earnings outlook for the quarter and the year and said the current difficult conditions in the financial services business are not likely to improve in the near future. The company left its dividend unchanged and suspended its stock buyback plan.

Capital One drops after it completed stock offering at a lower price. Bed Bath & Beyond matched the earnings views but predicted lower earnings for the quarter and the rest of the year. General Electric lowered its earnings outlook. McCormick edged higher after third quarter earnings rose.

Stocks in India fell after financial markets in the region declined. Financials, realty, software exporters and industrials fell. Inflation at the end of last week stabilized but hovered near its peak level. Rupee traded volatile and hovered near 46 rupee to a dollar.

Japan recorded its first monthly trade deficit in 26 years. Rising energy and coal imports and a decline in exports to the U.S. and Europe contributed to the deficit. The Bank of Japan added liquidity to the market and will carry out four more auctions in the rest of the year.

Stocks in Shanghai rose as China controlled investment arm stepped up its purchase of bank stocks. Bank of East Asia in Hong Kong faced a temporary run after rumors of collapse swept markets. Central bank denied the rumors and added HK$500 million in liquidity and Li Ka-shing purchased its stock.

Stocks in Australia fell after commodities and metal prices declined. Australian banks have less than 1% exposure to the sub-prime loans issues in the country, according to the latest report from RBA. Australian dollar gained. China based Shagan acquired 45% stake in Australian iron ore company.

North American Markets

Dow Jones Industrial Average increased 196.89 or 1.82% to a close of 11,022.06, S&P 500 Index closed up 23.31 or 1.97% to 1,209.18, and Nasdaq Composite Index increased 30.89 or 1.43% to close at 2,186.57. In Toronto TSX Composite closed up 33.15 or 0.26% to 12,546.51.

Of the 30 stocks in Dow Jones Industrial Average 24 closed higher and 6 closed lower.

JP Morgan Chase led gainers in Dow Jones Industrial Average with a rise of 7.3% followed by increases in General Electric of 4.43%, in Bank of America of 3.9%, in AT&T of 3.76% and in Pfizer Inc 3.6%.

General Motors led decliners in the index with a loss of 3.1% followed by losses in Alcoa Inc of 2.7%, in Du Pont of 2.6%, in United Technologies Corp of 0.8% and in Intel Corp of 0.7% and in Procter & Gamble of 0.33%.

Of the stocks in S&P 500 index, 395 increased, 105 declined and one was unchanged. Of the index stocks, 125 rose more than 3% and 12 fell more than 3%.

State Street led the gainers in the S&P 500 index with a rise of 13% followed by gains in CIT Group Inc of 10.2%, in Nike Inc of 9.7%, in Morgan Stanley of 9.3%, in Bank of New York Mellon of 8.9% and in MBIA Inc of 8.7%.

WaMu Inc led decliners in the S&P 500 index with a plunge of 25.22% followed by losses in AIG of 8.8%, in Cummins Inc of 8.30%, in Teradata Corp of 7.7%, in McGraw Hill Companies of 7.3%, in Capital One Finance of 5.1% and in BMC Software Inc of 4.4%.

South American Markets Indexes

Brazil led gainers in the region with a rise of 3.98% followed by increase in Argentina of 3.15%, in Mexico of 2.81%, in Chile of 1.67% and in Peru of 1.59%.

Venezuela the lone decliner in the region fell 1.13%.

Europe Markets Review

In London FTSE 100 Index closed higher 101.50 or 1.99% to 5,197.02, in Paris CAC 40 Index increased 112.27 or 2.73% to close at 4,226.81 and in Frankfurt DAX index higher 120.16 or 1.99% to close at 6,173.03. In Zurich trading SMI increased 165.15 or 2.44% to close at 6,945.49.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 108.50 or 0.90% to 12,006.53, Hang Seng index in Hong Kong decreased 27.56 or 0.15% closed to 18,934.43. CSI 300 index in China higher 84.68 or 3.96% closed to 2,223.53. ASX 200 index in Australia decreased 54.50 or 1.09% to close 4,927.40. The KL Composite index in Malaysia lower 3.66 or 0.36% closed to 1,024.74.

The Kospi Index in South Korea increased 5.65 or 0.38% to close at 1,501.63, SET index in Thailand closed higher 0.71 or 0.11% to 621.14 and JSE Index in Indonesia decreased 13.49 or 0.72% to 1,870.06. The Sensex index in India decreased 145.34 or 1.06% closed to 13,547.18.

Commodities, Metals, and Currencies

Crude oil increased $1.80 to close at $107.54 a barrel for a front month contract, natural gas increased 6 cent to $7.73 per mBtu and gasoline futures decreased 7.94 cents to close at 267.41 cents per gallon.

Wheat futures closed up 6.00 cents in Chicago trading and closed at $7.36 a bushel. Sugar increased 0.45 cent to 14.55 cents a pound. Soybean future closed down 4 cents to $11.83 a bushel.

Gold decreased $13.00 in New York trading to close at $882.00 per ounce, silver closed down $0.18 cents to $13.26 per ounce and copper for the front month delivery increased 1.85 cent to $3.15 per pound.

Dollar edged higher against euro to $1.4608 and gained against yen to 106.56.

Yields on 10-year U.S. bonds increased to 3.87% and increased to 4.42% with 30-year of maturities.