U.S. Stocks Surge 7%, Oil Leads Rally

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

U.S. stocks staged a sharp reversal after dropping nearly 2.5% in the morning trading and surged to close up 7%. The near 10% reversal in the market indexes occurred after crude oil prices rose and energy related stocks led the gainers. Asian markets closed down 5%. European markets edged up.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– U.S. stocks surged sharply from the loss of 3% to a close of 7% increase after crude oil prices increased and energy related stocks gained.[/R]

Global Markets

U.S. stocks staged a reversal after dropping nearly 2.5% in the morning trading and surged to close up 7%. The near 10% reversal in the market indexes occurred after crude oil prices rose and energy related stocks led the gainers.

Earlier stocks declined after the adjusted weekly jobless claims rose 32,000 to 516,000 at the end of the previous week. The claims were the highest since 2001. Nearly 3.9 million people are claiming jobless benefits at the end of the last week in October.

Separately, the U.S. trade deficit in September dropped to $56.5 billion from revised $59.1 billion August.

Asian stocks fell sharply as the U.S. politicians added more uncertainties to the markets. Lawmakers in the U.S. send conflicting signs regarding General Motors bailout and U.S. Treasury Secretary keeps changing his focus. Asian markets fell more than 5% and currencies declined 2% or more.

General Electric dropped to 12-year low before recovering with the market on the worries that its financial service unit may need more capital and the company may need to trim dividend, which the company denied.

Retailers and financials fell before the market recovery as Treasury Secretary Paulson now prefers to help consumer lender, change from his previous assertion that buying bad debts from banks will increase lending. Paulson is widely believed to have misled the U.S. Congress and has seen his credibility dip to another low.

Stocks in Japan and in Asia fell more than 5% as the U.S. lawmakers struggle to decide the fate of General Motors. The largest U.S. electronics retailer Best Buy issued grim holiday sales outlook. Exporters in Japan fell. Currencies in the region declined more than 2%.

Industrial production in China rose at a slower pace of 8.2% in October and retail sales surged 22% in the month. Electricity output fell 4% and passenger cars production declined 6.2% in the month. Hong Kong Exchange quarterly net declined 43%.

Australian stocks plummeted 5.9% as commodity stocks retreated on falling metal prices and 5% decline in crude oil prices. Copper and aluminum prices dropped to three-year lows as stockpiles increased on falling global demand for raw materials. Commonwealth Bank estimated higher loan losses.

North American Markets

Dow Jones Industrial Average surged 552.59 or 6.7% to a close of 8,835.25, S&P 500 Index closed up 58.97 or 6.9% to 911.27, and Nasdaq Composite Index soared 97.49 or 6.5% to close at 1,596.70. In Toronto, TSX Composite Index gained 387.87 or 4.4% to 9,310.44.

Of the 30 stocks in Dow Jones Industrial Average 28 closed higher and 2 closed lower.

Chevron Corp led the gainers in the index with a rise of 12.3% followed by increases in Caterpillar Inc of 11.8%, in Home Depot Inc of 11.3%, in Exxon Mobil Corp of 10.2%, in Alcoa Inc of 10% and in AT&T Inc of 4.1%.

General Motors dropped the most in the Dow with a loss of 3.3% and Citigroup Inc declined 1.5%.

Of the stocks in S&P 500 index, 473 increased, 25 decreased and one was unchanged. Of the index stocks, 421 rose more than 3%, 8 fell more than 3% and 130 surged above 10%.

Dr Pepper Snapple led decliners in the S&P 500 index with a plunge of 13% followed by losses in Prudential Financial of 5.9%, in Humana Inc of 4.3%, in MBIA Inc of 4.3%, in King Pharmaceuticals of 3.4% and in Gannett Company of 3.3%.

Genworth Financial led the gainers in the S&P 500 index with a surge of 60% followed by gains in Prologis of 53%, in CB Richard Ellis of 41%, in Office Depot Inc of 34%, Progressive Corp of 22%, in Allstate Corp of 21%, in Sovereign Bancorp of 20.8% and in Autonation Inc of 19.8%.

South American Markets Indexes

Mexico led gainers in the region with a rise of 4.8% followed by increase in Brazil of 4.7%, in Chile of 2.1% and in Argentina of 0.8%.

Colombia dropped 0.6% followed by decline in Venezuela of 0.1%.

Europe Markets Review

In London FTSE 100 Index closed lower 12.81 or 0.31% to 4,169.21, in Paris CAC 40 Index increased 35.50 or 1.10% to close at 3,269.46 and in Frankfurt DAX index higher 28.72 or 0.62% to close at 4,649.52. In Zurich trading SMI increased 37.18 or 0.64% to close at 5,740.04.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 456.87 or 5.25% to 8,238.64, Hang Seng index in Hong Kong decreased 717.74 or 5.15% closed to 13,221.35 CSI 300 index in China higher 72.26 or 4.01% closed to 1,874.08. ASX 200 index in Australia decreased 230.00 or 5.86% to close 3,697.30. The KL Composite index in Malaysia lower 9.75 or 1.10% closed to 880.59.

The Kospi Index in South Korea decreased 35.42 or 3.15% to close at 1,088.44. SET index in Thailand closed lower 2.23 or 0.51% to 433.47 and JSE Index in Indonesia decreased 66.91 or 5.04% to 1,259.71. The Sensex index in India decreased 456.87 or 5.25% closed to 8,238.64.

Commodities, Metals, and Currencies

Crude oil increased $3.06 to close at $59.22 a barrel for a front month contract, natural gas decreased 1 cent to $6.39 per mBtu and gasoline futures increased 6.39 cents to close at 131.20 cents per gallon.

Wheat futures closed up 5.25 cents in Chicago trading and closed at $5.58 a bushel. Sugar decreased 0.19 cent to 11.42 cents a pound. Soybean future closed down 1 cent to $8.94 a bushel.

Gold increased $11.70 in New York trading to close at $730.00 per ounce, silver closed down 47 cents to $9.75 per ounce and copper for the front month delivery decreased 9.30 cent to $1.6590 per pound.

Dollar edged lower against euro to $1.2816 and fell against yen to 97.70.

Yields on 10-year U.S. bonds increased to 3.74% and with 30-year maturities increased to 4.35%.