Global Stocks Plunge, Dow Down 5%

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

U.S. stocks plunged nearly 5% on the second day in a row after Cisco lowered its sales outlook, initial claims of unemployment were at elevated levels and same store sales at retailers fell. The ECB, Bank of England and Swiss National Bank lowered key lending rates. Toyota plunged on earnings.

4:25PM New York, 10:25PM Frankfurt, 6:25AM Sydney[R]– U.S. stocks plunged nearly 5% on the second day in a row after Cisco lowered its sales outlook, initial claims of unemployment were at elevated levels and same store sales at retailers fell. The ECB, Bank of England and Swiss National Bank lowered key lending rates. Toyota dropped after it lowered earnings view.[/R]

Global Markets

U.S. stocks dropped more than 4% after Cisco estimated sales decline of 10% in the current quarter and News Corp reported weak results. Initial claims of unemployment rose sharply at the end of last week.

European markets fell despite a rate cut in the region. The ECB and Swiss National Bank cut rate by 50 basis points and the Bank of England lowered it by 150 basis points. The Bank of England sharply lowered its key lending rate by 1.5% to 3%. The larger than anticipated rate cut was overshadowed by fall in metals and energy prices. The negative sentiment dragged stocks in UK lower by 6% and in Europe more than 5%.

Stocks in Japan fell sharply on the weak earnings outlook from Toyota and sell off in the U.S. markets. Toyota Motor net revenue declined 6.3% in the first half and estimated annual profit to drop 68%. Isuzu Motors net in the first half fell 19% and lowered annual profit outlook.

Stocks in Hong Kong dropped 7% and in Shanghai declined 2.5% after higher than expected private sector job losses in the U.S. Japan and other markets in Asia fell as well. Cathay Pacific warned that fuel hedging contract will cost the company $360 million.

Stocks in Mumbai dropped 4% after the annual wholesale inflation at the end of third week in October rose to 10.7%. The increase in inflation is likely to limit future rate cuts from the Reserve Bank of India. Foreign investors continue to sell stocks in India. Oil meal exports from India dropped 40%.

Australian stocks plunged 4% after the U.S. private sector employment report. Commodities and energy prices dropped as well. Australia employment adjusted for seasonal factors rose in October, unexpectedly. Media conglomerate News Corp first quarter net dropped to $515 million from $732 million.

Las Vegas Sands, casino operator in Las Vegas and Macau, China plunged on loan default and bankruptcy filing possibilities. Whole Foods rose after earnings and capital injection from a private equity fund. Toyota Motor dropped after it lowered earnings outlook. Cisco offered weak sales outlook. Cott Corp dropped 17% on a net loss.

North American Markets

Dow Jones Industrial Average plunged 443.48 or 4.9% to a close of 8,6959.79, S&P 500 Index closed down 47.87 or 5.1% to 904.90, and Nasdaq Composite Index decreased 72.94 or 4.4% to close at 1,608.70. In Toronto, TSX Composite Index dropped 351.06 or 3.6% to 9,536.14.

Of the 30 stocks in Dow Jones Industrial Average 29 closed lower and 1 closed unchanged.

General Motors led the decliners in the Dow Jones Industrial Average with a loss of 13.3% followed by losses in Alcoa Inc of 13%, in American Express of 10.9%, in Citigroup Inc 8.6%, in General Electric of 8.1% and Intel Corp of 7.8%.

Of the stocks in S&P 500 index, 472 decreased, 27 increased and one was unchanged. Of the index stocks, 4 rose more than 3% and 372 fell more than 3% and 47 dropped more than 10%.

Big Lots Inc led decliners in the S&P 500 index with a plunge of 27% followed by losses in XL Capital of 22%, in Consolidated Energy of 20%, in Hartford Financial Services Group of 19.4%, in Goodyear Tire of 19% and in El Paso Corp of 16.2%.

Hercules Inc led the gainers in the S&P 500 index with a rise of 10% followed by gains in DR Horton Inc of 7%, in King Pharmaceutical of 5%, in Whole Foods Market of 4%, Safeway Inc of 3%, in Compuware Corp of 2.2%, in Rohm & Haas of 2% and in Kroger Company of 1.4%.

South American Markets Indexes

Peru led decliners in the region with a fall of 6.9% followed by decrease in Colombia Corp of 4.3%, in Mexico of 3.9%, in Brazil of 3.8% and in Chile of 2.7%

Venezuela was unchanged 0.1%. Argentina was closed.

Europe Markets Review

In London FTSE 100 Index closed lower 258.32 or 5.70% to 4,272.41, in Paris CAC 40 Index decreased 230.86 or 6.38% to close at 3,387.25 and in Frankfurt DAX index lower 353.30 or 6.84% to close at 4,813.57. In Zurich trading SMI decreased 252.25 or 4.08% to close at 5,924.90.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 622.10 or 6.53% to 8,899.14, Hang Seng index in Hong Kong decreased 1,050.12 or 7.08% closed to 13,790.04 CSI 300 index in China lower 41.64 or 2.46% closed to 1,649.78. ASX 200 index in Australia decreased 186.90 or 4.31% to close 4,149.70. The KL Composite index in Malaysia lower 19.29 or 2.11% closed to 895.95.

The Kospi Index in South Korea decreased 89.28 or 7.56% to close at 1,092.22. SET index in Thailand closed higher 5.57 or 1.22% to 462.93 and JSE Index in Indonesia decreased 58.38 or 4.27% to 1,307.90. The Sensex index in India decreased 385.79 or 3.81% closed to 9,734.22.

Commodities, Metals, and Currencies

Crude oil decreased $4.31 to close at $60.99 a barrel for a front month contract, natural gas decreased 28 cent to $6.97 per mBtu and gasoline futures decreased 8.19 cents to close at 134.25 cents per gallon.

Wheat futures closed down 14.75 cents in Chicago trading and closed at $5.22 a bushel. Sugar decreased 77 cent to 11.87 cents a pound. Soybean future closed up 2 cents to $9.06 a bushel.

Gold decreased $9.00 in New York trading to close at $733.40 per ounce, silver closed down 43 cents to $10.02 per ounce and copper for the front month delivery decreased 9.90 cent to $1.72 per pound.

Dollar edged higher against euro to $1.2722 and fell against yen to 97.68.

Yields on 10-year U.S. bonds decreased to 3.69% and with 30-year maturities decreased to 4.19%.