Stocks Down 4%; Gold, Oil Fall 5%

123jump.com Staff
02 Oct, 2008
New York City

Fear of more declines and uncertainty of the U.S. House vote on banks bailout dragged the market lower. The U.S. benchmark indexes drop between 3% and 4.5% and European markets fell nearly 2%. Gold and oil futures decline 5%. Hartford Financial plunges 32%. GE declines 10% and raises $12 billion.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– The U.S. stocks plunge ahead of the House vote on the bank bailout bill. Insurance stocks plunged 32%. Agro-chemical stocks dived more than 24%.[/R]

Global Markets

U.S. stocks dived ahead of the crucial vote on the bailout bill in the House. The Senate passed the bill last night with overwhelming majority but several legislators in the House remain on the fence. Three popular benchmark indexes declined between 3% and 4.5%; gold and oil declined 5%.

The U.S. Senate overwhelmingly approved the financial market stabilization bill with $700 billion provisions. The unpopular bill has been termed by the public as bailout bill that was rejected by the U.S. House on Monday and the amended is likely to face a vote on tomorrow.

General Electric plunged 10% to 10-year low after it raised $12.2 billion in public offering at $22.25 a share and sold $3 billion of preferred stock to Warren Buffett controlled Berkshire Hathaway that pays 10% dividend.

Insurance companies fell sharply again for the third day in a row. Hartford Financial Services Group ((HIG)) plunged 32% or $12.20 to $25.91, Principal Financial Group ((PFG)) dropped 16% to $31.52 and Prudential Financial Group ((PRU)) dropped 11% to $57.65. Hartford in the last five days of trading has lost more than 50% of its value.

Agro-chemicals stocks dived after the Mosaic Corp missed earnings estimates. Merrill Lynch lowered its ratings on Agrium and Potash. The Mosaic dropped 31% and dragged down Bunge Ltd by 21%, Potash Corp by 25% and Intrepid Potash by 22%. Marriott fell as much as 10% on weaker earnings outlook.

Japan auto sales in the U.S. plunged 30% as sales of light trucks and SUVs fall. The large decline of what was widely believed as stable market for the Japanese auto makers put investors on the defensive. Steel makers and construction machinery companies fell the most in more than three years.

Australia reported its August trade surplus of A$1.3 billion from a revised deficit of A$697 million in July as exports rose 6% from a year ago and imports declined 2%. In trading, stocks edged lower as credit market remained tight and futures in metals market were on the decline.

North American Markets

Dow Jones Industrial Average fell 348.22 or 3.2% to a close of 10,482.85, S&P 500 Index closed down 46.78 or 4.03% to 1,114.28, and Nasdaq Composite Index down 92.68 or 4.5% to close at 1,976.72. In Toronto TSX Composite closed down 813.97 or 6.95% to 10,900.54.

Of the 30 stocks in Dow Jones Industrial Average 3 closed higher and 26 closed lower and 1 was unchanged.

General Electric led decliners in the index with a fall of 9.6% followed by losses in American Express of 9.1%, in Alcoa Inc of 8.9%, in Caterpillar Inc of 8.3%, in Intel Corp of 7.2% and in United Technologies Corp of 7%.

JP Morgan Chase led gainers in the Dow Jones Industrial Average with a rise of 0.45% followed by increases in Kraft Foods Inc of 0.3% and in Procter & Gamble of 0.3%.

Of the stocks in S&P 500 index, 35 increased, 464 declined and 1 was unchanged. Of the index stocks, 57 rose more than 3% and 117 fell more than 3%. And 6 stocks plunged more than 10%.

Constellation Energy led gainers in the S&P 500 index with a rise of 14% followed by gains in Regions Financial of 13%, in SLM Corp of 11%, in Wachovia Corp of 10.4%, in Sovereign Bancorp of 8.9%, in National City Corp of 8.6%, in Sun Trust Banks of 4.3% and in Micron Technology, Inc of 4%.

General Growth Properties led the decliners in the S&P 500 index with a plunge of 48% followed by losses in CF Industries of 34.6%, in Hartford Financial of 32.10%, in Weatherford International of 21%, in Flowserve Corp of 19.5% and in CB Richard Ellis of 17.5%.

South American Markets Indexes

Brazil led decliners in the region with a fall of 7.4% followed by decrease in Argentina of 5.28%, in Mexico of 4.4%, in Chile of 3.8%, in Peru of 4.4%, Colombia of 0.9% and in Venezuela of 0.15%.

Europe Markets Review

In London FTSE 100 Index closed lower 89.30 or 1.80% to 4,870.30, in Paris CAC 40 Index decreased 91.26 or 2.25% to close at 3,963.28 and in Frankfurt DAX index lower 145.70 or 2.51% to close at 5,660.63. In Zurich trading SMI increased 3.31 or 0.05% to close at 6,730.94.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 213.50 or 1.88% to 11,154.76 , Hang Seng index in Hong Kong increased 194.90 or 1.08% closed to 18,211.11. ASX 200 index in Australia decreased 33.50 or 0.70% to close 4,761.10. Market of China and Malaysia were closed today.

The Kospi Index in South Korea decreased 20.02 or 1.39% to close at 1,419.65. SET index in Thailand closed higher 3.24 or 0.55% to 597.69. Market of Indonesia and India were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $4.85 to close at $93.68 a barrel for a front month contract, natural gas decreased 28 cent to $7.45 per mBtu and gasoline futures decreased 11.04 cents to close at 224.96 cents per gallon.

Wheat futures closed down 33.75 cents in Chicago trading and closed at $6.36 a bushel. Sugar increased 0.85 cent to 13.08 cents a pound. Soybean future closed down 49 cents to $10.04 a bushel.

Gold decreased $47.50 in New York trading to close at $839.80 per ounce, silver closed down $1.86 cents to $10.91 per ounce and copper for the front month delivery decreased 6.17 cent to $2.61 per pound.

Dollar edged higher against euro to $1.3808 and gained against yen to 105.13.

Yields on 10-year U.S. bonds decreased to 3.64% and decreased to 4.15% with 30-year of maturities.