U.S. Stocks Gyrate, Oil Rises $5

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

The Fed lowered the rate by 0.5% to 1% and indicated that inflation will moderate as commodities and energy prices have declined. The rate cut expectations lifted markets in Asia and in Europe. However, after the cut U.S. stocks surged 3% but closed 1% lower. Oil surged $5 a barrel.

4:30PM New York, 10:30AM Frankfurt, 6:30AM Sydney[R]– The Fed lowered the rate by 0.5% to 1% and indicated that more cuts may be necessary. Stocks rose after the rate cut but fell sharply at close from the peak of 3% gains. European markets surged at close ahead of rate decision. China and Norway lowered rates.[/R]

Global Markets

The Fed lowered the Fed funds rate by 50 basis points to 1% in unanimous decision. The Fed is likely to lower rated further if economic activities remain weak. Investors hoping for a cut larger than 50 basis points were disappointed. Stocks fell after the decision.

Global stocks advanced on the back of a rally in the U.S. trading. Asian markets surged and European markets traded higher. This morning, stocks in New York edged lower ahead of the Fed decision to lower rates. The speculation is mounting that the Fed may lower rate by as much as 1%.

Nikkei 225 index surged 7.7% following a rise of 10% in New York. Japan industrial production fell 1.2% in September. Sony second quarter net income dropped 72% and the company left its full year profit unchanged. Sumitomo Mitsui first half profit fell 50% on bad loans of 220 billion yen.

Stocks in Hong Kong and Shanghai edged higher ahead of rate cut expectations. China lowered its rate by 27 basis points for deposits and lending. The third rate cut since Sept 15 by China is expected to stabilize the financial markets and stem the decline economic growth rate.

In Mumbai stocks closed higher in a volatile trading on weak trading volume. Reliance Communications dropped 10% ahead of the earnings results. Mahindra & Mahindra gained 8.3% after the company said that product demand is strong.

Australian stocks rose 1.3% on the hopes that the U.S. will lower rates today. JP Morgan Chase estimated fourth quarter economic growth to fall 3% and decline 4% in the first quarter of 2009. Australia is expected to invest $1 billion in mortgage securities.

North American Markets

Dow Jones Industrial Average soared 889.35 or 10.9% to a close of 9,065.12, S&P 500 Index closed up 91.59 or 10.8% to 940.51, and Nasdaq Composite Index increased 143.57 or 9.5% to close at 1,649.47. In Toronto, TSX Composite Index surged 614.29 or 7.2% to 9,151.39.

Of the 30 stocks in Dow Jones Industrial Average 23 closed higher and 7 fell.



Intel Corp led the decliners in the Dow with a loss of 3% followed by losses in Johnson & Johnson of 2.8%, in Verizon Communication of 1.5%, in 3M Company of 1.5% and in Coca Coal Company 0.2%.

Caterpillar Inc led gainers in the Dow Jones Industrial Average with a rise of 7.9% followed by gains in Alcoa Inc of 7.8%, in General Motors of 7.3%, in Boeing Company of 6%, in Home Depot Inc of 5.2% and in Chevron Corp of 4.9%.

Of the stocks in S&P 500 index, 252 increased, 247 declined and one was unchanged. Of the index stocks, 137 rose more than 3% and 101 fell more than 3%. And 101 declined more than 10%.

Sealed Air Corp led decliners in the S&P 500 index with a plunge of 21.6% followed by losses in Manitowoc Co of 15%, in AIG of 13.1%, in Embarq Corp of 8.5%, in McKesson Corp of 8.4% and in CenturyTel Inc of 7.8%.

MGIC Investment Corp led the gainers in the S&P 500 index with a surge of 47.2% followed by gains in Legg Mason Inc of 40.6%, in Consolidated Energy of 24%, in MBIA Inc of 23%, Centex Corp of 22%, in CIT Group of 21%, in Wyndham Worldwide of 21% and in Office Depot, D R Horton and Massey Energy of 20%.

South American Markets Indexes

Peru led gainers in the region with a surge o 7.7% followed by increase in Brazil of 6.6%, in Mexico of 4.7%, in Colombia of 4.5% and in Chie of 2.0%. Venezuela fell 0.03%.

Europe Markets Review

In London FTSE 100 Index closed higher 316.16 or 8.05% to 4,242.54, in Paris CAC 40 Index increased 287.65 or 9.23% to close at 3,402.57 and in Frankfurt DAX index higher 14.76 or 0.31% to close at 4,808.69. In Zurich trading SMI increased 342.03 or 6.18% to close at 5,880.57.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 589.98 or 7.74% to 8,211.90, Hang Seng index in Hong Kong increased 105.78 or 0.84% closed to 12,702.07. CSI 300 index in China lower 47.60 or 2.79% closed to 1,658.22. ASX 200 index in Australia increased 51.00 or 1.34% to close 3,845.60. The KL Composite index in Malaysia lower 3.03 or 0.36% closed to 829.41.

The Kospi Index in South Korea decreased 30.19 or 3.02% to close at 968.97. SET index in Thailand closed lower 13.89 or 3.49% to 384.15 and JSE Index in Indonesia increased 2.23 or 0.20% to 1,113.62. The Sensex index in India increased 36.43 or 0.40% closed to 9,044.51.

Commodities, Metals, and Currencies

Crude oil increased $5.27 to close at $68.00 a barrel for a front month contract, natural gas increased 35 cent to $6.54 per mBtu and gasoline futures increased 8.90 cents to close at 154.45 cents per gallon.

Wheat futures closed up 47.25 cents in Chicago trading and closed at $5.61 a bushel. Sugar decreased 0.95 cent to 12.09 cents a pound. Soybean future closed up 59 cents to $9.47 a bushel.

Gold increased $16.80 in New York trading to close at $757.30 per ounce, silver closed down $1.04 to $9.83 per ounce and copper for the front month delivery increased 19.15 cent to $2.05 per pound.

Dollar edged lower against euro to $1.2946 and declined against yen to 97.96.

Yields on 10-year U.S. bonds increased to 3.86% and with 30-year maturities increased to 4.23%.