U.S. Plunges 7%, Gold Shines 4%, Oil Down 10%

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

U.S. stocks dive after the House defeated bailout plan unpopular with voters. The Senate votes on the proposal on Wednesday. Nervous stock markets plunged more than 7% in the U.S., Canada and Brazil. Oil plunges 8% to $96 a barrel. Gold increases 4% to $930 an ounce.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– U.S. markets plunged the most in 20 years after the House members rejected bailout plan. Brazil plunged nearly 10%. Markets in Europe and Asia are likely to decline more than 6% in tomorrow’s trading.[/R]

Global Markets

The U.S. House in a rebuke to President defeated the bailout plan by a vote of 228 to 205. The frustrated House members are worried that the bailout plan will not save economy from sliding into a recession and saddle the nation with a huge debt. Stock market indexes plunged between 8% and 9%.

The defeat drove market indexes sharply lower and on the New York Stock Exchange only 162 closed higher 3,073 closed lower. Of the stocks in S&P 500 index, 499 closed lower and 360 lost more than 3% and 160 declined more than 10%.

While the today’s market decline crossed the intra-day decline of 721.56 points on the first trading day after September 11, 2001, in percentage terms the decline was well below near 20% decline on October 19, 1987 and the Depression. The decline in S&P 500 index today was the most since the 1987 crash.

The Fed in conjunction with eight other central banks in Europe and Asia pumped more liquidity in the market. The revised action will make available $620 billion in dollar liquidity in Europe and will also carry more short term lending auctions.

Citigroup agreed to pay for Wachovia $1 a share or $2.16 billion after intense discussions this morning between Fed regulators, the FDIC, and Treasury Secretary and the Board of Governors Citigroup agreed to acquire Wachovia Corp for $2.16 billion. The FDIC will get $12 billion of preferred stock in Citi for bearing any risk to portfolio beyond $42 billion.

Bradford Bingley, the troubled mortgage lender was seized by the UK Treasury and sold to Abbey National for £612 million. In addition, the governments of Benelux were forced to inject 11.2 billion in troubled bank Fortis. The fourth largest U.S. bank, Wachovia was forced in a merger with Citigroup.

Banks and financial institutions fall sharply after Wachovia was forced in a merger with Citigroup and lawmakers debate the merits and scope of $700 bailout plan. Apple fell after it lowered price on select iPod versions. Mining companies dropped as metal and crude oil prices decline.

North American Markets

Dow Jones Industrial Average plunged 777.68 or 7% to a close of 10,365.45, S&P 500 Index closed down 106.85 or 8.81% to 1,106.42, and Nasdaq Composite Index dived 199.61 or 9.14% to close at 1,983.73. In Toronto TSX Composite closed down 840.93 or 6.93% to 11,285.07.

Of the 30 stocks in Dow Jones Industrial Average none closed higher and 30 closed lower.

Wachovia led decliners in the index with a loss of 81.6% followed by losses in WaMu of 17.6%, in JP Morgan Chase of 15%, in General Motors of 12.81%, in Citigroup of 11.9% and in Chevron Corp of 10.87%.

Of the stocks in S&P 500 index, 1 increased, 499 declined and one was unchanged. Of the index stocks, none rose more than 3% and 460 fell more than 3%. And 163 stocks plunged more than 10%.

Wachovia Corp led decliners in the S&P 500 index with a plunge of 81.60% followed by losses in WaMu Inc of 78.8%, in Sovereign Bancorp of 72%, in National City Corp of 63.4%, in Fifth Third Bancorp of 43.6%, in Regions Financial of 41.1%, in Genworth of 8.7%, in First Horizon of 35.67% and in Keycorp of 33.3%.

South American Markets Indexes

Brazil led decliners in the region with a plunge of 9.4% followed by decrease in Argentina of 8.7%, in Mexico of 6.4%, in Chile of 5.5%, in Peru of 4.9% and in Colombia of 2.40%. Jamaica declined 1.04%.

Venezuela traded up 0.4%.

Europe Markets Review

In London FTSE 100 Index closed lower 269.70 or 5.30% to 4,818.80, in Paris CAC 40 Index decreased 209.90 or 5.04% to close at 3,953.48 and in Frankfurt DAX index lower 256.42 or 4.23% to close at 5,807.08. In Zurich trading SMI decreased 315.39 or 4.63% to close at 6,500.13.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 149.55 or 1.26% to 11,743.61, Hang Seng index in Hong Kong decreased 801.41 or 4.29% closed to 17,880.68. ASX 200 index in Australia decreased 97.40 or 1.99% to close 4,807.40. The KL Composite index in Malaysia lower 0.81 or 0.08% closed to 1,019.72. Market of China was closed today.

The Kospi Index in South Korea decreased 19.97 or 1.35% to close at 1,456.36, SET index in Thailand closed lower 17.68 or 2.86% to 601.29 and JSE Index in Indonesia decreased 13.58 or 0.74% to 1,832.51. The Sensex index in India decreased 506.43 or 3.87% closed to 12,595.75.

Commodities, Metals, and Currencies

Crude oil decreased $10.84 to close at $96.05 a barrel for a front month contract, natural gas decreased 47 cent to $7.16 per mBtu and gasoline futures decreased 10.55 cents to close at 238.40 cents per gallon.

Wheat futures closed down 48.00 cents in Chicago trading and closed at $6.68 a bushel. Sugar decreased 0.59 cent to 13.89 cents a pound. Soybean future closed down 70 cents to $10.94 a bushel.

Gold increased $41.50 in New York trading to close at $930.00 per ounce, silver closed down $0.20 cents to $13.31 per ounce and copper for the front month delivery decreased 20.75 cent to $2.86 per pound.

Dollar edged lower against euro to $1.4618 and gained against yen to 106.17.

Yields on 10-year U.S. bonds decreased to 3.62% and decreased to 4.16% with 30-year of maturities.