Insurers, Financials Lead U.S. Indexes Lower

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

U.S. stocks closed down 2.6%. Financial companies lead the decliners on the worries that more companies will need to raise capital. Citigroup lowered its head count by 53,000 and Goldman Sachs executives forego bonuses. Japan reported second quarterly economic growth decline. UK economy to shrink.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– U.S. market indexes declined as more financial companies look for ways to boost capital. Citigroup cut its headcount by 14% and Goldman Sachs executives forego bonuses. Insurance stocks fell sharply. Japan reported second consecutive quarterly economic growth decline. UK industry group forecasted negative growth.[/R]

Global Markets

World markets declined after the meeting of 20 nations failed to send a clear message. Japan slides into recession as third quarter GDP declined 0.4%. European stocks fell after UK industry group estimated longer and deeper recession. However, October industrial production rose 1.3% after declining 3.7% in September.

Citigroup plans to cut additional 53,000 staff and trim expenses by 20% from peak in 2005. The company said it has already lowered its asset by 20% and eliminated 20,000 positions. Goldman Sachs said that seven senior executives will forego bonuses in light of the current financial markets meltdown and help the firm save capital. Goldman Sachs recently was awarded federal bank charter and received capital from the U.S. Treasury.

U.S. stocks closed down 2.6% and Canada fell 2.9%.

Economy in Japan shrank for the second quarter in a row. Economy in the third quarter fell 0.4% after dropping 0.1% in the second quarter. Two quarterly declines in GDP generally augur a recession. A rise in utilities stocks lifted market index from the fall of 3% to close up 0.7%.

The UK industry group lowered its GDP forecast for this year and a higher decline in GDP next year with the estimate of contraction of 1.7% in 2009. UK home prices in November fell 7.1%. London stock index dropped 2.7%. A growing number of investors are voicing concerns about the Barclays capitalization plan to sell preferred stock at a discount to Mid-east investors and pay a steep 14% interest.

Stocks in Hong Kong fell in shrinking trading on the worries that exports from the region are likely to remain low for this and next year. Stocks in Shanghai gained 2% on the expectations that China will provide financial assistance. Bank of East Asia and Sumitomo Mitsui are in talks to form a regional venture.

Stocks in India fell 1% in weak trading. Reserve Bank of India lowered the risk exposure for banks to commercial sector loans. RBI also added liquidity. Exporters are worried that falling economies in the U.S., Europe and Japan will drag sales. Airline Kingfisher may sell stake.

Australian benchmark index fell 2.5% following declines in New York trading in Friday. Commodities and energy stocks led the fall. Australia retail sales in September rose 0.1%, less than expected as consumers tighten their wallets. Money market rates in Sydney trading after RBA pumped A$1.7 billion in liquidity.

North American Markets

Dow Jones Industrial Average dropped 223.73 or 2.6% to a close of 8,273.58, S&P 500 Index closed down 22.54 or 2.6% to 850.75, and Nasdaq Composite Index declined 34.80 or 2.3% to close at 1,482.05. In Toronto, TSX Composite Index declined 260.51 or 2.9% to 8,795.45.

Of the 30 stocks in Dow Jones Industrial Average 3 closed higher and 27 closed lower.

Alcoa Inc led the decliners in the Dow index with a fall of 10.8% followed by decreases in Bank of America of 8.5%, in Citigroup Inc of 6.6%, in Walt Disney Company of 6.4%, in JP Morgan Chase of 4.9% and in Merck & Company of 4.9%.

General Motors led the gainers in the Dow with a rise of 5.6% followed by gains in General Electric of 0.6% and Boeing of 0.3%.

Of the stocks in S&P 500 index, 69 increased, 430 decreased and one was unchanged. Of the index stocks, 6 rose more than 3%, 227 fell more than 3% and 16 dropped above 10%.

Hartford Financial Services led decliners in the S&P 500 index with a plunge of 27% followed by losses in MetLife Inc of 21%, in Prudential Financial of 17%, in Intuitive Surgical dropped 17%, in CIT Group Inc of 15.7% and in Abercrombie & Fitch of 14%.

General Motors led the gainers in the S&P 500 index with a rise of 5.7% followed by gains in Lowe’s Co Inc of 4%, in Teradata Corp of 3.8%, in Southwestern Energy of 3.1%, Allegheny Energy of 3.1%, in Embarq Corp of 3%, in Advanced Micro Devices of 2.9% and in Reynolds America of 2.7%.

South American Markets Indexes

Argentina led the decliners in the South American region with a loss of 3.3% followed by losses in Peru of 1.9%, in Mexico of 0.80%, in Chile of 0.75% , Brazil of 0.2% and Venezuela of 0.07%.

Europe Markets Review

In London FTSE 100 Index closed lower 100.81 or 2.38% to 4,132.16, in Paris CAC 40 Index decreased 109.44 or 3.32% to close at 3,182.03 and in Frankfurt DAX index lower 152.97 or 3.25% to close at 4,557.27. In Zurich trading SMI decreased 188.32 or 3.23% to close at 5,646.43.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 60.19 or 0.71% to 8,522.58, Hang Seng index in Hong Kong decreased 13.13 or 0.10% closed to 13,529.53 CSI 300 index in China higher 43.57 or 2.24% closed to 1,987.22. ASX 200 index in Australia decreased 95.10 or 2.54% to close 3,653.00. The KL Composite index in Malaysia higher 2.41 or 0.27% closed to 884.06.

The Kospi Index in South Korea decreased 9.94 or 0.91% to close at 1,078.32. SET index in Thailand closed higher 4.24 or 0.99% to 434.21 and JSE Index in Indonesia decreased 27.44 or 2.17% to 1,236.93. The Sensex index in India decreased 94.41 or 1.01% closed to 9,291.01.

Commodities, Metals, and Currencies

Crude oil decreased $1.96 to close at $55.08 a barrel for a front month contract, natural gas increased 26 cents to $6.58 per mBtu and gasoline futures decreased 6.20 cents to close at 117.71 cents per gallon.

Wheat futures closed down 20.50 cents in Chicago trading and closed at $5.54 a bushel. Sugar increased 0.09 cent to 11.74 cents a pound. Soybean future closed up 10.50 cents to $9.0650 a bushel.

Gold decreased $6.40 in New York trading to close at $736.10 per ounce, silver closed down 22 cents to $9.27 per ounce and copper for the front month delivery decreased 6.65 cent to $1.64850 per pound.

Dollar edged lower against euro to $1.2650 and fell against yen to 96.41.

Yields on 10-year U.S. bonds dropped to 3.65% and with 30-year maturities decreased to 4.19%.