Earnings Worries, Indexes 5-Year Lows

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

The rise of dollar, decline in interbank lending rates and a drop in metals and crude oil prices would generally lift investors sentiment. But, investors focused on economic slowdown and declining profit at industrial, mining and energy companies. Dollar rise against and euro. Latin markets plunge.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– Investors ignored falling crude oil and metals prices and focused on weak earnings and weaker outlook from companies. Crude oil dropped to a 2-year low. Copper declined below $2 a pound.[/R]

Global Markets

A sharp fall in energy ad metals prices dragged resource stocks lower. The broader market averages S&P 500 and Nasdaq indexes dropped as disappointing earnings drove investors away. Crude oil futures prices dropped below $67 a barrel last seen in June 2007 and S&P 500 index dropped to a level in April 2003.

The rise of dollar, decline in interbank lending rate and a drop in metals and crude oil prices would generally have lifted sentiment among investors. But, the growing worries of economic slowdown and declining profit at mining and energy companies left investors in a cautious mood.

Investors were focused on falling earnings or cloudy outlook from Wachovia, Boeing, ConocoPhillips, Air Products, EMC Corp and Merck.

Latin American markets plunged. Brazil and Argentina dropped more than 11% and Peru fell nearly 10%. Mexico and Canada declined 7% and 6% respectively.

Amazon.com after the closed lowered its earnings guidance for the full year and stocks dropped more than 12%.

North American Markets

Dow Jones Industrial Average dropped 514.45 or 5.7% to a close of 8,519.21, S&P 500 Index closed down 58.27 or 6.1% to 896.78, and Nasdaq Composite Index decreased 80.93 or 4.8% to close at 1,615.75. In Toronto, TSX Composite Index fell 558.92 or 5.7% to 9,236.9.

Of the 30 stocks in Dow Jones Industrial Average all closed lower.

Alcoa Inc led the decliners in the Dow Jones Industrial Average followed by losses in Exxon Mobil Corp of 9.7%, in Walt Disney Company 8.9%, in Verizon Communication of 8.1%, in Microsoft Corp of 7.8% and in AT&T of 7.6%.

Of the stocks in S&P 500 index, 21 increased, 479 declined and none were unchanged. Of the index stocks, 8 rose more than 3% and 418 fell more than 3%. And 101 declined more than 10%.

Coventry Health led decliners in the S&P 500 index with a plunge of 51.2% followed by losses in Developers Diversified of 38%, in General Growth Properties of 37%, in SanDisk Corp of 31.7%, in Consol Energy of 22.1% and in Baker Hughes Inc of 22.1%.

Jabil Circuit led the gainers in the S&P 500 index with a surge of 10.7% followed by gains in CH Robinson of 9.6%, in Broadcom Corp of 6.5%, in Apple Inc of 6%, in Pactiv Corp of 3.5%, in Juniper Networks of 3.2% and in EMC Corp and Lexmark International of 3.1%.

South American Markets Indexes

Argentina led decliners in the region with a plunge of 10.2% after the government plan to nationalize its pension system. The pension funds control $30 billion and have been net buyers in the stock market. In the region, Brazil plunged 10.2% followed by losses in Peru of 9.4%, in Mexico 7%, in Chile of 5.9% and in Colombia of 4.9%.

Europe Markets Review

In London FTSE 100 Index closed lower 188.84 or 4.46% to 4,040.89, in Paris CAC 40 Index decreased 177.22 or 5.10% to close at 3,298.18 and in Frankfurt DAX index lower 213.34 or 4.46% to close at 4,571.07. In Zurich trading SMI decreased 260.02 or 4.20% to close at 5,925.46.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 631.56 or 6.79% to 8,674.69, Hang Seng index in Hong Kong decreased 774.57 or 5.15% closed to 14,266.60. CSI 300 index in China lower 48.08 or 2.56% closed to 1,833.32. ASX 200 index in Australia decreased 146.40 or 3.40% to close 4,156.10. The KL Composite index in Malaysia lower 13.88 or 1.51% closed to 904.28.

The Kospi Index in South Korea decreased 61.51 or 5.14% to close at 1,134.59. SET index in Thailand closed lower 13.55 or 2.83% to 465.24, and JSE Index in Indonesia decreased 60.41 or 4.19% to 1,379.74. The Sensex index in India decreased 513.49 or 4.81% closed to 10,169.90.

Commodities, Metals, and Currencies

Crude oil decreased $5.28 to close at $66.90 a barrel for a front month contract, natural gas decreased 1.6 cent to $6.86 per mBtu and gasoline futures increased 0.71 cents to close at 157.80 cents per gallon.

Wheat futures closed up 4 cents in Chicago trading and closed at $5.21 a bushel. Sugar decreased 0.28 cent to 10.96 cents a pound. Soybean future closed down 1.00 cents to $2.563 a bushel.

Gold decreased $11.30 in New York trading to close at $723.90 per ounce, silver closed up 2 cents to $9.48 per ounce and copper for the front month delivery decreased 2.35 cent to $1.842 per pound.

Dollar edged higher against euro to $1.281 and dropped against yen to 97.59.

Yields on 10-year U.S. bonds decreased to 3.61% and with 30-year maturities decreased to 4.08%.