U.S. Stocks Rise, Auto Sales Plunge

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

U.S. stocks surged on the belief that the Fed will provide additional liquidity and may lower rates in less than two weeks. November auto sales plunged on tight lending and weak demand. Australia lowered its key rate by 1% and Japan left its rate unchanged. Mumbai stocks decline for the second day.

5:30PM New York, 11:30PM Frankfurt, 7:30AM Sydney[R]– U.S. stocks rallied on the hopes that the Fed is accommodative in lowering rates and looks for other was to contain economic expansion. November auto sales in the U.S. plunged. Bank of Japan left its overnight rates unchanged. Australia lowered its key lending rate by 1% to 4.25%. [/R]

Global Markets

U.S. stocks rallied on the hopes that the Fed will continue to lower rates. Fed Chairman Bernanke did not rule out zero rate possibility in a speech and Treasury Secretary offered flexibility to support mortgage loans purchases. The Fed is running out of options and will be forced to opt for alternative ways to support lending and add liquidity. Ford is seeking $9 billion from the Congress, General Motors is seeking $14 billion and Chrysler is looking for $7 billion in bridge loan.

U.S. auto sales in November fell 37% from a year ago. Chrysler decline in sales led the industry with a plunge of 47% followed by drops in sales at Nissan of 42%, at GM of 41%, at Toyota of 34% and at Ford of 31%.

The Bank of Japan left its overnight lending rate unchanged at 0.3% and will initiate new lending programs for corporation and accept lower grade corporate debt as collateral.

Stocks in Mumbai, India fell 1%, a decline for the second day in a row. Hotels, software exporters and commodities miners led the losers. Tata Consultancy Services Ltd. plunged 5.6% and Mahindra & Mahindra dropped 9% after weak auto sales in November. Tata Motors Ltd dropped 3.1% and Reliance Industries fell 3.2%. Indian Hotels, the owner and operator of Taj Hotel & Tower in Mumbai and several cities around the world plunged 7% after the recent terrorist attack.

Reserve Bank of Australia lowered its key lending rate by 1% to 4.25%. The large rate cut spread worries among investors that the economy may be softer than estimated. ASX 200 index plunged 4.2%. RBA said that rate cuts are necessary to sustain economic expansion and global demand is likely to drop.

North American Markets

Dow Jones Industrial Average gained 270.00 or 3.30% to a close of 8,419.90, S&P 500 Index increased 32.60 or 4% to 848.81, and Nasdaq Composite Index gained 51.73 or 3.70% to close at 1,449.80. In Toronto, TSX Composite Index dropped 864.41 or 9.32% to 8,406.21.

Of the stocks in Dow Jones Industrial Average 28 increased and 2 gained.

General Electric led gainers in the Dow with a rise of 13.6% followed by increases in Citigroup Inc of 12%, in Bank of America of 11.8%, in JP Morgan Chase of 9.2% and in Merck & Company of 7.3%.

3M Company fell 2.4% and Coca-Cola Company declined 0.9%.

Of the stocks in S&P 500 index, 455 increased, 43 decreased and 2 were unchanged. Of the index stocks, 8 fell more than 3%, 303 closed above 3% and 46 surged more than 10%.

Eastman Chemical led decliners in the S&P 500 index with a fall of 7.6% followed by losses in Micron Technology of 6.70%, in MetLife Inc of 6.1%, in Chesapeake Energy of 5.0%, in Transocean Inc of 4.3% and in American Electric of 4.2%.

Real estate investment trusts and banks led the gainers in the index. Prologis led gainers in the S&P 500 index with a fall of 27% followed by increases in Sprint Nextel Company of 26%, in CIT Group Inc of 21%, in XL Capital Ltd of 20.3% and in MBIA Inc of 19.9%.

South American Markets Indexes

Argentina led gainers in the region with a rise of 2.9% followed by increases in Mexico of 1.4%, in Brazil of 0.8% and in Colombia of 0.8%.

Chile led decliners in the region with a loss of 0.71% followed by losses in Peru of 0.3% and in Venezuela of 0.2%.

Europe Markets Review

In London FTSE 100 Index closed higher 57.37 or 1.41% to 4,122.86, in Paris CAC 40 Index increased 72.47 or 2.35% to close at 3,152.90 and in Frankfurt DAX index higher 137.00 or 3.12% to close at 4,531.79. In Zurich trading SMI increased 10.01 or 0.18% to close at 5,537.59.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 533.53 or 6.35% to 7,863.69, Hang Seng index in Hong Kong decreased 702.99 or 4.98% closed to 13,405.85 CSI 300 index in China higher 4.43 or 0.24% closed to 1,868.63. ASX 200 index in Australia decreased 153.00 or 4.16% to close 3,528.20. The KL Composite index in Malaysia lower 2.68 or 0.32% closed to 845.75.

The Kospi Index in South Korea decreased 35.42 or 3.35% to close at 1,023.20. SET index in Thailand closed lower 3.60 or 0.92% to 387.32 and JSE Index in Indonesia decreased 31.77 or 2.60% to 1,191.36. The Sensex index in India decreased 100.63 or 1.14% closed to 8,739.24.

Commodities, Metals, and Currencies

Crude oil decreased $1.66 to close at $47.62 a barrel for a front month contract, natural gas decreased 16 cents to $6.44 per mBtu and gasoline futures decreased 14.00 cents to close at 106.60 cents per gallon.

Wheat futures closed up 0.50 cents in Chicago trading and closed at $5.2850 a bushel. Sugar decreased 0.03 cent to 11.62 cents a pound. Soybean future closed down 19 cent to $8.27 a bushel.

Gold decreased $42.20 in New York trading to close at $776.80 per ounce, silver closed up 21 cents to $9.585 per ounce and copper for the front month delivery decreased 4.10 cent to $1.590 per pound.

Dollar edged lower against euro to $1.2710 and rose against yen to 93.28.

Yields on 10-year U.S. bonds dropped to 2.67% and with 30-year maturities decreased to 3.18%.