Indexes Rise on Insurers Bailout, Google Net Up

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

U.S. stock indexes rebounded more than 4% after crude oil fell to as low as $70 a barrel and metal and agriculture commodities prices fell. Bond insurers are preparing plans to participate in the U.S. bailout plan. Ambac and MBIA surge.Google third quarter net rises 26%.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– U.S. stocks rebounded after crude oil touched as low as $70 a barrel. Bond insurers are preparing plans to participate in the U.S. bailout plan.[/R]

Global Markets

U.S. market indexes rallied between 4% and 5% after the bond insurers prepare a plan to participate in the U.S. government bailout plan. Crude oil dropped as low as $70 a barrel. Metal and agriculture commodities priced dropped. Merrill Lynch reported its fifth quarterly loss. Peabody surged on earnings and eBay estimated lower fourth quarter revenue.

The Swiss government offered a bailout package to UBS after it failed to raise capital from private investors. Credit Suisse plans to raise nearly $10 billion from Qatar and other investors. UBS will transfer up to $49 billion of risky loans including $31 billion loans linked to U.S. mortgages.

The Bank of England offered liquidity of $254 billion to money markets in UK to restore interbank lending and lower overnight rates. The move only adds to the total government and the BoE intervention of $3 trillion. However, the interbank lending rates are falling but only gradually. Insurance stocks in UK fell sharply after Goldman Sachs lowered rating and expressed negative comments on the sector. Aviva Plc, Prudential Plc and Old Mutual Plc plunged between 15% and 20%.

Stocks in Mumbai, India fell on the weakness in global markets. Mutual funds in India suffered 77 billion rupees withdrawals in the month. The sharp decline in Sensex and weakness in global markets also forced companies to tap 300 billion rupees. Foreign investor outflow stands at $11 billion in the year.

Australian stocks plunged 6.6% after the weak U.S. retail sales dragged markets in China and Japan. Global market worries dragged the indexes sharply lower in Asia. National Australia Bank reported full-year profit to September will fall 11% to A$3.9 billion from A$4.4 billion a year ago.

North American Markets

Dow Jones Industrial Average rose 401.35 or 4.7% to a close of 8,979.26, S&P 500 Index closed up 38.59 or 4.25% to 946.43, and Nasdaq Composite Index increased 89.38 or 5.49% to close at 1,717.71. In Toronto TSX Composite Index fell 0.6% or 53.88 to 9,269.97.

Of the 30 stocks in Dow Jones Industrial Average 27 closed higher and 3 closed lower.

Exxon Mobil led gainers in the index with a rise of 11.4% followed by increases in Wal-Mart Stores of 9.2%, in Alcoa Inc of 7.8%, in United Technologies of 7.3% and in Microsoft Corp of 6.8%.

American Express led decliners in the Dow Jones Industrial Average with a fall of 3.2% followed by losses in Citigroup Inc of 2.1% and in Home Depot Inc of 0.6%.

Of the stocks in S&P 500 index, 421 increased, 75 declined and 4 were unchanged. Of the index stocks, 292 rose more than 3% and 27 fell more than 3%. And 40 rose more than 10%.

CIT Group Inc led the decliners in the S&P 500 index with a fall of 37.8% followed by losses in Lincoln National Corp of 15.2%, in Hartford Financial Services of 11.9%, in Meadwestvaco Corp of 10.5%, in Prudential Financial of 10.4% and in Unum Group of 8.3%.

MBIA Inc led the gainers in the S&P 500 index with a surge of 32% followed by gains in SLM Corp of 24%, in Southwestern Energy of 21%, in Peabody Energy of 18%, in Macy’s Inc of 16%, in Nucor Corp of 16% and in Apache Corp of 15.9%.

South American Markets Indexes

Peru led decliners in the region with a fall of 7.2% followed by decreases in Mexico of 3.25%, in Colombia of 3.5% in Chile of 1.5%, in Brazil of 1.06% and in Venezuela of 0.7%.

Europe Markets Review

In London FTSE 100 Index closed lower 218.20 or 5.35% to 3,861.39, in Paris CAC 40 Index decreased 200.07 or 5.92% to close at 3,181.00 and in Frankfurt DAX index lower 238.82 or 4.91% to close at 4,622.81. In Zurich trading SMI decreased 192.64 or 3.26% to close at 5,718.53.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 1,089.02 or 11.41% to 8,458.45, Hang Seng index in Hong Kong decreased 767.78 or 4.80% closed to 15,230.52. CSI 300 index in China lower 93.45 or 4.88% closed to 1,820.90. ASX 200 index in Australia decreased 286.60 or 6.67% to close 4,013.40. The KL Composite index in Malaysia lower 29.86 or 3.14% closed to 920.02.

The Kospi Index in South Korea decreased 126.50 or 9.44% to close at 1,213.78. SET index in Thailand closed lower 3.77 or 0.78% to 477.73, and JSE Index in Indonesia decreased 57.16 or 3.76% to 1,463.25. The Sensex index in India decreased 227.63 or 2.11% closed to 10,581.49.

Commodities, Metals, and Currencies

Crude oil decreased $2.50 to close at $72.04 a barrel for a front month contract, natural gas increased 20 cent to $6.79 per mBtu and gasoline futures decreased 9.6 cents to close at 168.60 cents per gallon.

Wheat futures closed down 0.50 cents in Chicago trading and closed at $5.55 a bushel. Sugar decreased 0.02 cent to 11.16 cents a pound. Soybean future closed up 7.75 cents to $8.80 a bushel.

Gold decreased $32.00 in New York trading to close at $807.00 per ounce, silver closed down 46 cents to $9.72 per ounce and copper for the front month delivery decreased 3.05 cent to $2.18 per pound.

Dollar edged higher against euro to $1.3451 and dropped against yen to 101.55.

Yields on 10-year U.S. bonds decreased to 3.96% and with 30-year maturities increased to 4.26%.