U.S. Worries; China Stimulus, Metals Climb

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

U.S. stocks closed lower on the worries that the economy may be weaker than it appears. Goldman Sachs cuts 10% of payroll. Circuit City bankruptcy filing drags most retailers and real estate trusts lower. China announces $585 billion stimulus plan. Resource stocks and Asian markets rallied.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– US stocks closed lower on the worries that the economy may be weaker than it appears. Goldman Sachs cut 10% of its staff. Circuit City bankruptcy filing dragged most retailers and real estate trusts lower. China announced $585 billion stimulus plan. Resource stocks and Asian markets rallied.[/R]

Global Markets

The Federal Reserve invested $40 billion in preferred stock in AIG and lowered original loan of $85 billion to $60 billion and set up separate facilities to purchase mortgage and other securities. The revised and relaxed plan will increase Fed involvement with AIG to $150 billion and increase risk.

In New York trading, stocks closed lower after Google was downgraded and Goldman Sachs eliminated 10% of its positions.

Circuit City bankruptcy filing dragged stocks of real estate investment trusts. Goldman dropped after it laid-off 10% of its staff. Google Inc declined on negative views from Barclays. General Motors plunged 30% on bankruptcy worries. China related stocks surged on stimulus package.

UK stocks edged higher after miners and energy companies rallied. Metals and crude oil prices rose after China announced a $585 economic stimulus plan. Pound gained against dollar to $1.57 and against euro dropped to 82.09 pence. HSBC loan losses rise. Cable & Wireless revenue fell 5%.

Asian stocks rallied after China announced a $585 billion plan to stimulate economy, increase infrastructure spending and help farmers and small businesses. Resource stocks closed sharply higher in Australia. Heave machinery maker IHI in Japan lowered annual earnings outlook.

Japan stocks surged on the speculation that economic stimulus package from China will lift machinery demand. Shipping lines and construction machinery companies rose. Tokyo stocks surged 6%. Japan foreign exchange reserve declines $18 billion to $977 billion at the end of October.

Stocks in Shanghai surged 7.4% and in Hong Kong gained 3.5% after China released 4 trillion yuan plan to stimulate the economy. China plan will increase infrastructure spending, remove bank limits for loans and help farmers. Metals and steel makers surged on a rise in base metal prices.

Mumbai stocks rebounded on the hopes that global economy will stabilize after the G-20 meeting and China economic stimulus plan of $585 billion. Metals, realty and banking sector stocks closed sharply higher. October auto sales declined 6.6% on tighter credit conditions. Rupee gained 0.6% to 47.32.

Stocks in Australia gained after China announced a stimulus package of Rmb 4 trillion. Commodities prices and resource sector stocks gained. Financial stocks declined after RBA noted that only half of recent rate cuts have been passed on to customers by banks.

North American Markets

Dow Jones Industrial Average dropped 73.27 or 0.8% to a close of 8,870.54, S&P 500 Index closed down 11.78 or 1.3% to 919.21, and Nasdaq Composite Index decreased 30.66 or 1.9% to close at 1,616.74. In Toronto, TSX Composite Index rose 92.59 or 0.96% to 9,688.80.

Of the 30 stocks in Dow Jones Industrial Average 10 closed higher and 20 closed lower.

General Motors led the gainers in the index with a fall of 23% followed by increases in Walt Disney of 5.5%, in American Express of 5.3%, in Citigroup Inc of 5.2%, in Bank of America of 4.9% and in JP Morgan Chase of 4%.

Alcoa Inc led the gainers in the Dow with a loss of 5.3% followed by increase in McDonalds Corp of 1.8%, in AT& T Inc, in Verizon Communication 1.5% and in Wal-Mart Stores of 1.4%.

Of the stocks in S&P 500 index, 119 increased, 380 decreased and one was unchanged. Of the index stocks, 20 rose more than 3% and 164 fell more than 3%.

American Capital led decliners in the S&P 500 index with a plunge of 43% followed by losses in General Growth Properties of 34%, in Unisys Corp of 33%, in Developers Diversified of 25%, in General Motors of 23% and in Prologis of 22.6%.

Tesoro Corp led the gainers in the S&P 500 index with a rise of 9% followed by gains in Peabody Energy of 8.3%, in AIG of 8%, in Nabor Industries Ltd of 6%, Newmont Mining of 5.6%, in Qwest Communication of 5.4%, in Monster Worldwide of 5.4% and in Alcoa Inc of 10.8%.

South American Markets Indexes

Peru led gainers in the region with a rise of 2.9% followed by increase in Chile of 1.5%, in Mexico of 0.8%, in Brazil of 0.3%.

Argentina led the decliners in the region 1% followed by losses in Colombia of 0.4%.

Europe Markets Review

In London FTSE 100 Index closed higher 38.96 or 0.89% to 4,403.92, in Paris CAC 40 Index increased 36.63 or 1.06% to close at 3,505.75 and in Frankfurt DAX index higher 87.07 or 1.76% to close at 5,025.53. In Zurich trading SMI increased 82.46 or 1.37% to close at 6,090.62.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 498.43 or 5.81% to 9,081.43, Hang Seng index in Hong Kong increased 501.20 or 3.52% closed to 14,744.63 CSI 300 index in China higher 123.84 or 7.38% closed to 1,801.66. ASX 200 index in Australia increased 56.50 or 1.39% to close 4,107.80. The KL Composite index in Malaysia higher 10.29 or 1.15% closed to 904.24.

The Kospi Index in South Korea increased 17.97 or 1.58% to close at 1,152.46. SET index in Thailand closed lower 7.37 or 1.59% to 456.44 and JSE Index in Indonesia increased 2.32 or 0.17% to 1,340.68. The Sensex index in India increased 571.87 or 5.74% closed to 10,536.16.

Commodities, Metals, and Currencies

Crude oil increased $1.37 to close at $62.41 a barrel for a front month contract, natural gas increased 649 cent to $7.25 per mBtu and gasoline futures decreased 2.19 cents to close at 134.60 cents per gallon.

Wheat futures closed down 0.75 cents in Chicago trading and closed at $5.19 a bushel. Sugar decreased 0.01 cent to 12.00 cents a pound. Soybean future closed down 11.25 cents to $9.36 a bushel.

Gold decreased $0.50 in New York trading to close at $746.00 per ounce, silver closed down 4 cents to $10.18 per ounce and copper for the front month delivery increased 5.50 cent to $1.7520 per pound.

Dollar edged lower against euro to $1.2748 and fell against yen to 97.98.

Yields on 10-year U.S. bonds decreased to 3.74% and with 30-year maturities decreased to 4.19%.