Dow, S&P Down 5%; Nasdaq Drops 6%

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

For the first time in the year all thirty stocks in Dow Jones Industrial Average dropped two days in a row. Record number of stocks in S&P 500 index closed down, 400 stocks fell more than 3% and 74 stocks fell more than 10%. The Fed acts to provide liquidity in short term loan market.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– U.S. stocks plunged for the second day in a row. For the first time this year, all 30 stocks in Dow Joes declined for the second day in a row. Record number of stocks in S&P 500 index closed lower.[/R]

Global Markets

The Fed, invoking emergency powers, authorized a special fund to purchase high quality short term loans in the commercial paper market. The move is likely to improve liquidity and restore confidence in the short term loan market that has faced historic volatility and near seizure in the last few weeks.

The Bank of Japan left its key lending rate at 0.5% and cautioned that commodities prices are likely to drop but inflation is expected to remain near 2.5%. Japanese yen edged lower but traded near three-year high against euro and dollar.

Early rally in Mumbai trading faltered despite market regulator, Sebi lifting the ban on P-note transactions and the RBI lowering cash reserves ratios by 0.5%. Tata Motors agreed to relocate its Nano manufacturing plant to Gujarat. Rupee dropped to another low. Infosys drops to a 2-year and TCS falls to 3-year lows.

The Reserve Bank of Australia lowered its key lending rate by 100 basis points to 6%. The larger than anticipated cut was prompted by tight lending conditions in the global markets. Stocks rallied on the rate decision. Mining and energy stocks rallied but gains were trimmed in late trading.

UK government is at advanced stages of discussion to invest between £30 billion and £40 billion in three of its largest banks, Royal Bank of Scotland, Barclays and Lloyds TSB. The recapitalization plan will effectively nationalize three banks but will also improve liquidity in the markets. There is no guarantee that such a move is likely to happen but sources within UK Treasury confirm the nature of talks with the Bank of England.

North American Markets

Dow Jones Industrial Average fell 508.39 or 5.11% to a close of 9,447.11, S&P 500 Index closed down 60.66 or 5.74% to 996.23, and Nasdaq Composite Index down 108.08 or 5.8% to close at 1,754.88. In Toronto TSX Composite closed down 400.88 or 3.92% to 9,829.55.

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

Bank of America led decliners in the index with a fall of 26.3% followed by losses in Citigroup Inc of 13%, in General Motors of 11%, in JP Morgan Chase of 10.6%, in Alcoa Inc of 7.7% and in Pfizer Inc of 6.8%.

Of the stocks in S&P 500 index, 17 increased, 482 declined and 1 was unchanged. Of the index stocks, 5 rose more than 3% and 400 fell more than 3%. And 74 stocks plunged more than 10%.

Advanced Micro Devices led gainers in the S&P 500 index with a rise of 8.5% followed by gains in Safeway Inc of 5%, in Goodyear Tire of 3.8%, in AES Corp of 3.7%, in New York Times of 2.7%, in CIT Group Inc of 1.9%, in Waters Corp of 1.8% and in Forest Lab of 1.3%.

General Growth Properties led the decliners in the S&P 500 index with a plunge of 42% followed by losses in Apartment Investment of 27.2%, in Bank of America of 26%, in Merrill Lynch of 25%, in Morgan Stanley of 24.9% and in Ford Motor Company of 21%.

South American Markets Indexes

Brazil led decliners in the region with a fall of 4.7% followed by decrease in Chile of 4.3% in Peru of 4.2%, in Mexico of 4%, in Argentina of 2.7% and in Colombia of 0.8%.

Venezuela gained 0.22%.

Europe Markets Review

In London FTSE 100 Index closed higher 16.03 or 0.35% to 4,605.22, in Paris CAC 40 Index increased 20.24 or 0.55% to close at 3,732.22 and in Frankfurt DAX index lower 60.38 or 1.12% to close at 5,326.63. In Zurich trading SMI decreased 30.96 or 0.48% to close at 6,427.76.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 317.19 or 3.03% to 10,155.90, CSI 300 index in China lower 26.25 or 1.23% closed to 2,102.45. ASX 200 index in Australia increased 78.30 or 1.72% to close 4,618.70. The KL Composite index in Malaysia higher 0.39 or 0.04% closed to 997.23. Market of Hong Kong was closed today.

The Kospi Index in South Korea increased 7.35 or 0.54% to close at 1,366.10, SET index in Thailand closed lower 23.09 or 4.18% to 528.71, and JSE Index in Indonesia decreased 29.02 or 1.76% to 1,619.72. The Sensex index in India decreased 106.46 or 0.90% closed to 11,695.24.

Commodities, Metals, and Currencies

Crude oil decreased $1.94 to close at $89.75 a barrel for a front month contract, natural gas decreased 6 cent to $6.77 per mBtu and gasoline futures decreased 0.32 cents to close at 205.59 cents per gallon.

Wheat futures closed down 45 cents in Chicago trading and closed at $5.9525 a bushel. Sugar increased 0.24 cent to 12.03 cents a pound. Soybean future closed up 3 cents to $9.25 a bushel.

Gold increased $23.90 in New York trading to close at $890.10 per ounce, silver closed up $0.25 cents to $11.54 per ounce and copper for the front month delivery decreased 5.50 cent to $2.4380 per pound.

Dollar edged lower against euro to $1.3602 and lost against yen to 101.39.

Yields on 10-year U.S. bonds increased to 3.50% and with 30-year maturities increased to 4.03%.