Bank Bailout Law; Nasdaq Down 11%

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

The U.S. market indexes dropped despite the passage of the bank bailout bill with $700 billion provision. For the Week, the indexes Nasdaq dropped 11%, S&P 500 plunged 9.4% and Dow fell 7.3%. The credit markets between banks remained tight and Libor rate reached record levels.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– The U.S. benchmark weekly drop matched the last since in the week of terrorist attack. Market indexes are likely to drop further. The U.S. House passed the controversial bailout bill.[/R]

Global Markets

The U.S. House approved the financial market stabilization bill with $700 billion provisions. The unpopular bill has been termed by the public as bailout bill for the Wall Street. The U.S. House on Monday rejected the bill and after the Senate amended with more tax reliefs provision, additional monitoring of the Treasury authority and curb on the pay for the executive salaries it was passed today. The vote was 263 to 171.

The President George W. Bush also signed his approval immediately after the House passage.

The U.S. markets still sold off and closed lower for the day and one of the worst losses in the week. The Nasdaq plunged 10.8%, the S&P 500 index lost 9.4% in the week and the Dow declined 7.3%. CB Richard Ellis and Jones Lang La Salle fell 12% and 8% and engineering construction companies fell sharply as well. Jacobs Engineering, Fluor Corp and the Shaw Group dropped. General Cable Corporation dropped 14% and Walgreen Company fell to 5-year low.

The London interbank offered rate increased for euro loans to a record high and for dollar to recent highs. The 3-month libor rate rose to a record 5.33% and for dollar surged to January high of 4.33%. The banks are still unwilling to lend money to each other.

North American Markets

Dow Jones Industrial Average fell 157.47 or 1.5% to a close of 10,325.38, S&P 500 Index closed down 15.05 or 1.35% to 1,099.23, and Nasdaq Composite Index down 29.33 or 1.5% to close at 1,947.39. In Toronto TSX Composite closed down 97.19 or 0.89% to 10,803.35.

Of the 30 stocks in Dow Jones Industrial Average 9 closed higher and 21 closed lower and none was unchanged.

Citigroup led decliners in the index with a fall of 18.5% followed by losses in JP Morgan Chase of 7.9%, in Bank of America of 5.2%, in Home Depot Inc of 4.2%, in American Express of 3.95% and in McDonalds Corp of 2.7%.

Merck & Company led gainers in the Dow Jones Industrial Average with a rise of 2.2% followed by increases in Wal-Mart Stores of 1.5% and in Intel Corp of 0.6%.

Of the stocks in S&P 500 index, 128 increased, 368 declined and 4 were unchanged. Of the index stocks, 23 rose more than 3% and 141 fell more than 3%. And 9 stocks plunged more than 10%.

Wachovia Corp led gainers in the S&P 500 index with a rise of 58% followed by gains in General Growth Properties of 27%, in Huntington Bancorp of 16%, in Regions Financial of 14%, in National City Corp of 11.8%, in Sovereign Bancorp of 11.3%, in Advanced Micro Device of 9.4% and in Weatherford International of 8%.

Citigroup Inc led the decliners in the S&P 500 index with a plunge of 18.5% followed by losses in Discover Financial of 14.6%, in Developers Diversified of 13.30%, in Lennar Corp of 13%, in CB Richard Ellis of 11.7% and in SanDisk Corp of 11%.

South American Markets Indexes

Mexico led decliners in the region with a fall of 4.3% followed by decrease in Brazil of 3.53%, in Chile of 2.3%, in Argentina of 0.54%, in Peru of 0.9% and in Colombia of 0.4%.

Venezuela, the lone gainer in the region rose 0.24%.

Europe Markets Review

In London FTSE 100 Index closed higher 109.91 or 2.26% to 4,980.25, in Paris CAC 40 Index increased 117.47 or 2.96% to close at 4,080.75 and in Frankfurt DAX index higher 136.40 or 2.41% to close at 5,797.03. In Zurich trading SMI increased 148.88 or 2.21% to close at 6,879.82.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 216.62 or 1.94% to 10,938.14 , Hang Seng index in Hong Kong decreased 528.71 or 2.90% closed to 17,682.40. ASX 200 index in Australia decreased 65.70 or 1.38% to close 4,695.40. The KL Composite index in Malaysia lower 1.98 or 0.19% closed to 1,016.70. Market of China was closed today.

SET index in Thailand closed lower 7.64 or 1.28% to 590.05. The Sensex index in India decreased 529.35 or 4.05% closed to 12,526.32. Market of South Korea and Indonesia were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $0.22 to close at $93.75 a barrel for a front month contract, natural gas decreased 11 cent to $7.37 per mBtu and gasoline futures decreased 2.75 cents to close at 222.75 cents per gallon.

Wheat futures closed up 4.25 cents in Chicago trading and closed at $6.4025 a bushel. Sugar decreased 0.53 cent to 12.55 cents a pound. Soybean future closed down 12 cents to $9.92 a bushel.

Gold decreased $10.80 in New York trading to close at $833.50 per ounce, silver closed up $0.14 cents to $11.26 per ounce and copper for the front month delivery increased 1.35 cent to $2.641 per pound.

Dollar edged higher against euro to $1.3830 and gained against yen to 105.34.

Yields on 10-year U.S. bonds decreased to 3.62% and wit 30-year maturities declined to 4.11%.