U.S. Stocks Down 5%, Oil Drop 7%

123jump.com Staff
05 Nov, 2008
New York City

U.S. stocks dropped more than 5% and crude oil futures declined 7%. Nervous investors worried after steel companies lowered production targets and energy complex stocks fell. Private sector employment fell according to survey conducted by ADP.

4:25PM New York, 10:25PM Frankfurt, 6:25AM Sydney[R]– U.S. stocks dropped more than 5% after investors worried that president-elect Barack Obama may face a tougher challenge in navigating current economic malaise. European markets closed lower after oil plunged 7%. Japan and China surged.[/R]

Global Markets

U.S. stocks dropped more than 5% after investors worried that economic weakness is likely to persist and the president-elect Barack Obama and Democratic Party may face a difficult task in handling the economy. The president-elect Barack Obama is likely to increase infrastructure spending and accelerate the pullout of the U.S. troops from Iraq. The Libor rate dropped, but still hovers above the Fed rates. Energy related stocks fell after oil dropped to $65 a barrel.

Agrium Inc rose after third quarter revenues and earnings surged. ArcelorMittal plunged after it increased its cuts in production target for the fourth quarter. Blue Nile sales fell 3%. The Boston Beer Company and Kenneth Cole Productions reported quarterly losses.

London stocks fell 2.3% on a slew of negative government reports that showed the UK manufacturing output dropped in September and service sector activity declined in October. Commodity stocks also plunged as oil and metal prices declined. ArcelorMittal lowered production target.

Stocks in Tokyo surged after the victory of Barack Obama in the U.S. Presidential election. Investors in Japan speculated that change in economic policies may revive the U.S. economy and exports from Japan faster. Sumitomo Heavy Industries surged 23% after it reported better than interim profit.

Hong Kong and Shanghai market indexes surged on the hopes that the U.S. president-elect Barack Obama will revive the economic growth and exports from China may not decline next year. Manufacturing index in China declined in October from September. Interbank rates in Hong Kong fell to 2.55%.

Mumbai stocks fell sharply in the afternoon trading. Sensex index closed down nearly 5% and CNX Nifty index dropped below 3,000 mark. Wireless carriers fell after the government plan to impose higher additional taxes. Bharti Airtel dropped 4.5% and Reliance Communication declined 10%.

Australia lowered its budget surplus, economic growth and tax receipts collection targets for the next three fiscal years. Global economic slowdown is expected to lift unemployment and slow down household expenditures. September housing permits approval dropped 7.2% from August.

North American Markets

Dow Jones Industrial Average plunged 486.01 or 5.1% to a close of 9,139.27, S&P 500 Index closed down 52.98 or 5.3% to 952.77, and Nasdaq Composite Index decreased 98.48 or 5.5% to close at 1,681.64. In Toronto, TSX Composite Index dropped 229.38 or 2.3% to 9,887.20.

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

Citigroup Inc led the decliners in the Dow Jones Industrial Average with a loss of 14% followed by losses in Bank of America of 11%, in Merck & Company of 7.7%, in Pfizer Inc 7.7%, in Boeing Company of 7.6% and Intel Corp of 7.4%.

Of the stocks in S&P 500 index, 484 increased, 16 declined and none were unchanged. Of the index stocks, 8 rose more than 3% and 378 fell more than 3% and 44 dropped more than 10%.

General Growth Properties led decliners in the S&P 500 index with a plunge of 54% followed by losses in MBIA Inc of 22%, in Developers Diversified of 19%, in Jacobs Engineering Group of 16.2%, in Autonation Inc of 16.1% and in Massey Energy of 15.8%.

Medco Health Solution led the gainers in the S&P 500 index with a rise of 10% followed by gains in Molson Coors of 9%, in Chesapeake Energy of 8.5%, in Humana Inc of 7.5%, Hospira Inc of 7%, in Yahoo! Inc of 4.6%, in Hercules of 4% and in Centerpoint Energy of 3.9%.

South American Markets Indexes

Brazil led decliners in the region with a fall of 6.2% followed by decrease in Mexico of 5.5%, in Colombia and Peru of 3.2%, in Chile of 1.1% and in Venezuela of 0.1%. Argentina gained 1%.

Europe Markets Review

In London FTSE 100 Index closed lower 108.77 or 2.34% to 4,530.73, in Paris CAC 40 Index decreased 72.98 or 1.98% to close at 3,618.11 and in Frankfurt DAX index lower 111.17 or 2.11% to close at 5,166.87. In Zurich trading SMI decreased 222.83 or 3.48% to close at 6,177.15.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 406.64 or 4.46% to 9,521.24, Hang Seng index in Hong Kong increased 455.82 or 3.17% closed to 14,840.16 CSI 300 index in China higher 63.66 or 3.91% closed to 1,691.42. ASX 200 index in Australia increased 121.50 or 2.88% to close 4,336.60. The KL Composite index in Malaysia higher 9.66 or 1.07% closed to 915.24.

The Kospi Index in South Korea increased 28.15 or 2.44% to close at 1,181.50. SET index in Thailand closed lower 0.26 or 0.06% to 457.36 and JSE Index in Indonesia decreased 3.51 or 0.26% to 1,366.28. The Sensex index in India decreased 511.11 or 4.81% closed to 10,120.01.

Commodities, Metals, and Currencies

Crude oil decreased $5.36 to close at $65.17 a barrel for a front month contract, natural gas increased 4 cent to $7.26 per mBtu and gasoline futures decreased 11.07 cents to close at 142.20 cents per gallon.

Wheat futures closed down 35.25 cents in Chicago trading and closed at $5.37 a bushel. Sugar decreased 0.07 cent to 12.64 cents a pound. Soybean future closed down 55 cents to $9.04 a bushel.

Gold decreased $17.50 in New York trading to close at $739.80 per ounce, silver closed up 21 cents to $10.35 per ounce and copper for the front month delivery decreased 14.9 cent to $1.8095 per pound.

Dollar edged lower against euro to $1.2917 and fell against yen to 98.37.

Yields on 10-year U.S. bonds increased to 3.73% and with 30-year maturities increased to 4.21%.