U.S. Stocks Plunge 8%; Recession Worries

123jump.com Staff
01 Dec, 2008
New York City

U.S. stocks plunged 8% after weak manufacturing and construction reports. Of the stocks in S&P 500 index, 498 dropped and 214 plunged more than 10%. A private economic group suggested that the U.S. has been in a recession for a year. Manufacturing indexes in China and UK dropped.

6:30PM New York, 11:30PM Frankfurt, 8:30AM Sydney[R]– U.S. benchmark index dropped between 7% and 10%. European markets plunged more than 5% on weak manufacturing report in UK. China manufacturing index fell and in Japan another home builder filed for bankruptcy protection.[/R]

Global Markets

U.S. stocks plunged 9% on weak manufacturing and construction after the private group of economists said that recession may have started as early as a year ago. U.S. stocks gave up more than half of the gains of 18% last week, the best weekly gain in the last 75 years. Holiday sales kicked off strong but after heavy merchandising discount by retailers. Most retailers are likely to face a sharp decline in earnings. Crude oil fell 10%.

UK stocks declined 6% after weak manufacturing and housing market reports. Manufacturing activities index declined the most in 16 years. UK home prices fell to the level last seen in 2006. Miners declined on the worries that BHP and Rio Tinto will be forced to cut iron ore prices.

Wages in Japan fell 0.1% in October. Morimoto Company, the condominium developer filed for bankruptcy after going public only nine months ago. For the year nearly 23 large real estate developers have sought protection from creditors. Nikkei 225 index dropped 1.4%.

Manufacturing in China declined according to the latest survey of 700 manufacturers. Yunnan regional government plans to spend $3 billion to purchase base metal production from local companies to support activities. The pledge lifted stocks in the sector and in Hong Kong.

Mumbai stocks fell nearly 3% after exports declined 12% in October. Trade deficit in the month eased but worries of a fall in international trade dragged stocks lower. Vehicle makers fell after November sales declined. Bajaj Auto sales fell 32% and Maruti Suzuki sales plunged 24%.

Stocks in Australia fell 1.6% ahead of interest rate decision. ABS reported sharp fall in operating profit at Australian companies in the quarter ending in September. BHP and Rio Tinto fell on the worries that industry will be forced to lower iron ore prices.

North American Markets

Dow Jones Industrial Average plunged 679.95 or 7.70% to a close of 8,149.09, S&P 500 Index decreased 80.03 or 8.9% to 816.21, and Nasdaq Composite Index declined 137.50 or 8.95% to close at 1,398.07. In Toronto, TSX Composite Index gained 864.41 or 9.32% to 8,406.21.

All 30 stocks in Dow Jones Industrial Average dropped. Eight stocks fell more than 10%.

Citigroup Inc led decliners in the Dow with a fall of 22.2% followed by losses Bank of America of 21%, in JP Morgan Chase of 17.5%, in American Express of 15.7%, in Alcoa Inc of 13.5% and in General Motors of 12.4%.

Of the stocks in S&P 500 index, 498 increased, 2 decreased and none were unchanged. Of the index stocks, 486 fell more than 3%, 1 closed above 3% and 214 plunged more than 10%.

Prologis led decliners in the S&P 500 index with a fall of 34% followed by losses in CB Richard Ellis of 29.4%, in Liz Claiborne of 26%, in Developers Diversified of 25.4%, in Janus Capital Group of 25.4%, in Sprint Nextel Company of 24.4%, in Wachovia Corp of 24% and in Merrill Lynch of 23.4%.

Banks, financials and insurance companies were among the leading decliners. KeyCorp fell 22%, Citigroup dropped 22%, in Prudential Financial declined 21% and in Bank of America of 21%.

South American Markets Indexes

Argentina led decliners in the region with a loss of 6.9% followed by losses in Brazil of 5.1%, in Mexico of 4.9%, in Peru of 3.65%, in Chile of 3% and in Colombia of 1.9%.

Venezuela rose 0.9%.

Europe Markets Review

In London FTSE 100 Index closed lower 222.52 or 5.19% to 4,065.49, in Paris CAC 40 Index decreased 182.25 or 5.59% to close at 3,080.43 and in Frankfurt DAX index lower 274.65 or 5.88% to close at 4,394.79. In Zurich trading SMI decreased 289.02 or 4.97% to close at 5,527.58.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 115.05 or 1.35% to 8,397.22, Hang Seng index in Hong Kong increased 220.60 or 1.59% closed to 14,108.84 CSI 300 index in China higher 34.28 or 1.87% closed to 1,864.20. ASX 200 index in Australia decreased 61.30 or 1.64% to close 3,681.20. The KL Composite index in Malaysia lower 17.71 or 2.04% closed to 848.43.

The Kospi Index in South Korea decreased 17.45 or 1.62% to close at 1,058.62. SET index in Thailand closed lower 10.92 or 2.72% to 390.92 and JSE Index in Indonesia decreased 18.42 or 1.48% to 1,223.12. The Sensex index in India decreased 252.85 or 2.78% closed to 8,839.87.

Commodities, Metals, and Currencies

Crude oil decreased $5.15 to close at $49.28 a barrel for a front month contract, natural gas increased 9 cents to $6.60 per mBtu and gasoline futures decreased 9.84 cents to close at 111.12 cents per gallon.

Wheat futures closed down 33.25 cents in Chicago trading and closed at $5.28 a bushel. Sugar decreased 0.25 cent to 11.65 cents a pound. Soybean future closed down 37 cent to $8.46 a bushel.

Gold decreased $42.20 in New York trading to close at $776.80 per ounce, silver closed down 85 cents to $9.38 per ounce and copper for the front month delivery decreased 1.85 cent to $1.6310 per pound.

Dollar edged higher against euro to $1.259 and rose against yen to 93.19.

Yields on 10-year U.S. bonds dropped to 2.73% and with 30-year maturities decreased to 3.21%.