U.S. Stocks Rise, AIG Salary Freeze

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

U.S. stocks edged higher after the Fed extended yet another loan facilities to lift asset and mortgage based markets. The latest move offers up to $800 billion in loan purchases and extends the Fed balance sheet to a new limit. The third quarter GDP decline was revised to 0.5%.

4:30PM New York, 10:30PM Frankfurt, 6:30AM Sydney[R]– The Federal Reserve extended another loan facility of $800 billion to mortgage and asset backer loans in what appears to be another fire fighting action. The Fed is quickly running out of options and recent liquidity moves and guarantees are likely to lift long term inflation average in the near future.[/R]

Global Markets

The Federal Reserve extended up to $800 billion of loan facilities to the mortgage and asset based backed loans market. The Fed is quickly running out of alternatives and is now deeply engaged in buying riskier loans and appears to take risk that most banks failed to manage in a prudent manner.

U.S. stocks edged higher after the Fed committed to extend nearly $800 billion in loans to asset backed loans and mortgage backed loans. The third quarter U.S. GDP was revised downward to a shrink of 0.5% from the previous estimate of 0.3% decline from the second quarter. The current dollar GDP was estimated in the third quarter at $14.42 trillion an increase of 3.6%

Office rents in Mid-town Manhattan, Tokyo financial district and London West End fell for the first time in seven years.

Stocks in Tokyo rallied tracking the gains in the U.S. following the Friday holiday. Banks gained after the U.S. extended second rescue package to Citigroup. The Bank of Japan lowered its domestic economy assessment. Panasonic is likely to pay $5.2 billion for a majority stake in Sanyo Electric.

Stocks in Hong Kong surged on the second rescue package for Citigroup. World Bank lowered its annual economic growth target for China to 7.5%. China is considering investing as much as 10% of total market capitalization in local markets.

Stocks in Australia soared 6% after metals and oil prices rallied. The second rescue package for Citigroup lifted the mood in trading and China plan to invest directly in the local stocks lifted trading sentiment. Qantas plans to cut its capacity and said it hedged fuel for 2009 at $106 a barrel.

North American Markets

Dow Jones Industrial Average increased 36.08 or 0.4% to a close of 8,479.47, S&P 500 Index increased 5.58 or 0.7% to 857.39, and Nasdaq Composite Index declined 7.29 or 0.5% to close at 1,464.73. In Toronto, TSX Composite Index gained 1.99 or 0.02% to 8,442.86.

Of the 30 stocks in Dow Jones Industrial Average 16 closed higher and 14 closed lower.

Hewlett Packard led decliners in the Dow with a fall of 5.9% followed by losses in United Tech Corp of 4%, in Microsoft Corp of 3.4%, in Intel Corp of 3.2%, in Procter & Gamble of 2.3% and in Boeing Company of 1.4%.

JP Morgan Chase led the gainers in the Dow with a rise of 8% followed by increase in Alcoa Inc of 6%, in Home Depot of 3.8%, in Wal-Mart Stores 3.6%, in General Electric of 3.4%, in Chevron Corp of 3%.

Of the stocks in S&P 500 index, 294 increased, 203 decreased and 3 were unchanged. Of the index stocks, 135 rose more than 3%, 57 fell more than 3% and 20 surged above 10%.

E*Trade Financial led the gainers in the S&P 500 index with a surge of 50% followed by gains in Lincoln National Corp of 44%, in DR Horton of 38%, in Lennar Corp of 31%, SLM Corp of 22%, in CIT Group Inc of 21%, in MBIA Inc of 18% and in Prologis of 16%.

Genworth Financial led decliners in the S&P 500 index with a fall of 23.5% followed by losses in American Capital of 11.7%, in CB Richard Ellis of 11.2%, in Altera Corp of 8.50%, in Electronic Arts of 8.3% and in Bank of New York Mellon of 7.8%.

South American Markets Indexes

Brazil led gainers in the South American region with a rise of 1.8% followed by increases in Colombia of 0.8% and in Argentina of 0.5%.

Peru led decliners in the region with a loss of 2.6% followed by losses in Mexico of 1.2%, in Chile of 0.2% and Venezuela was unchanged.

Europe Markets Review

In London FTSE 100 Index closed higher 18.29 or 0.44% to 4,171.25, in Paris CAC 40 Index increased 37.45 or 1.18% to close at 3,209.56 and in Frankfurt DAX index higher 6.09 or 0.13% to close at 4,560.42. In Zurich trading SMI increased 11.99 or 0.22% to close at 5,478.39.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 413.14 or 5.22% to 8,323.93, Hang Seng index in Hong Kong increased 420.66 or 3.38% closed to 12,878.60 CSI 300 index in China lower 3.35 or 0.18% closed to 1,834.29. ASX 200 index in Australia increased 198.30 or 5.79% to close 3,623.40. The KL Composite index in Malaysia higher 4.79 or 0.56% closed to 860.18.

The Kospi Index in South Korea increased 13.18 or 1.36% to close at 983.32. SET index in Thailand closed higher 5.73 or 1.48% to 391.85 and JSE Index in Indonesia increased 12.74 or 1.12% to 1,154.14. The Sensex index in India decreased 207.59 or 2.33% closed to 8,695.53.

Commodities, Metals, and Currencies

Crude oil decreased $3.82 to close at $50.68 a barrel for a front month contract, natural gas decreased 44 cents to $6.39 per mBtu and gasoline futures decreased 5.25 cents to close at 109.00 cents per gallon.

Wheat futures closed down 4.00 cents in Chicago trading and closed at $5.52 a bushel. Sugar increased 0.11 cent to 11.61 cents a pound. Soybean future closed down 1 cent to $8.83 a bushel.

Gold increased $2.30 in New York trading to close at $822.70 per ounce, silver closed down 1.8 cents to $10.36 per ounce and copper for the front month delivery decreased 1.30 cent to $1.6585 per pound.

Dollar edged lower against euro to $1.3052 and rose against yen to 95.33.

Yields on 10-year U.S. bonds dropped to 3.11% and with 30-year maturities decreased to 3.62%.