Insurance Stocks Rally, Nasdaq Up 4.4%

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

November unemployment rose 6.7% in the U.S. as 533,000 people lost their jobs, largest monthly cut in 33 years. Stocks closed higher after Hartford Financial lifted earnings outlook and Prudential offered better than expected earnings views.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– November unemployment rose 6.7% in the U.S. as 533,000 people lost their jobs, largest monthly cut in 33 years. Stocks closed higher after Hartford Financial lifted earnings outlook and Prudential offered better than expected earnings views.[/R]

Global Markets

U.S. stocks dropped in the morning after November employment report showed 533,000 jobs were eliminated. The rate of job loss was the highest since 1974. Mortgage delinquencies and foreclosure rates rose to the record level in 30 years. Insurance stocks led gainers and energy stocks led decliners in S&P 500.

The market indexes surged on a rally in insurance stocks Hartford and Prudential revised earnings outlook. Hartford Financial surged 102% after it lifted its earnings guidance and Prudential soared 30% on its improved outlook for 2009.

Insurance regulators are likely to relax variable annuities capital requirements. The approval is likely to be granted to the industry as early as next week according to a research note from UBS.

European stocks fell sharply in the region after the release of higher than expected unemployment data in the U.S. German factory orders in October dropped 6.1% after dropping 8.3% in September. HSBC will retake its headquarters building from Metrovacesa after it failed to refinance the loan.

German manufacturing orders fell 6.1% in October after dropping 8.3% in September. From the year ago orders declined 16.1%. Export orders in the month declined 6.2% and domestic orders fell 6.1%.

Tokyo stocks fell marginally but for the week Nikkei 225 index plunged 7%. Japan lawmakers are likely to pass banks recapitalization plan next week allowing government to take direct stakes in struggling banks. Goldman Sachs slashed price targets for most banks by 50%. Honda trimmed workforce.

Stocks in Shanghai and in Hong Kong surged after China offered more capital to stimulate the economy. U.S. and China provided together $20 billion for export financing. India and China plan to carry out a joint military exercise to combat rising terrorism in Mumbai.

Mumbai stocks dropped 2.6% on economic slowdown worries and terrorist attack rumors in New Delhi. Traders are expecting a large rate cut from the Reserve Bank of India after central banks in Europe cut rates. Rupee rose against the U.S. dollar. Larsen & Toubro suspended its entry in shipbuilding.

Australian construction industry shrank for the ninth month in a row in November as housing market demand falls. Weak demand, tight lending and falling employment are dragging the housing sector. Sydney stocks fell 1.2%. Four largest banks are expected to offer loans to domestic car industry.

North American Markets

Dow Jones Industrial Average gained 259.18 or 3.1% to a close of 8,635.42, S&P 500 Index increased 30.85 or 2.9% to 876.07, and Nasdaq Composite Index surged 63.75 or 4.4% to close at 1,509.31. In Toronto, TSX Composite Index added 59.21 or 0.7% to 8,117.03.

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

General Motors declined Dow with a fall of 0.7% and AT&T Inc dropped 0.1%.

JP Morgan Chase led gainers in the Dow with a rise of 7.3% followed by increase in Bank of America of 6.3%, in Merck & Company of 6% and in Kraft Foods of 5.9% and Wal-Mart Stores 5.6%.

Of the stocks in S&P 500 index, 457 increased, 43 decreased and none were unchanged. Of the index stocks, 8 fell more than 3%, 323 closed above 3% and 40 surged more than 10%.

American Capital led decliners in the S&P 500 index with a fall of 9% followed by losses in AES Corp of 7.4%, in Apache Corp of 4.4%, in Chesapeake Energy of 4.4%, in Freeport McMoran of 4.1% and in New York Times of 3.8%.

Hartford Financial Services led gainers in the S&P 500 index with a surge of 102.4% followed by increases in Lincoln National Corp of 42%, in Principal Financial of 41%, in Prologis of 35% and in Prudential Financial of 34.7%.

South American Markets Indexes

Mexico led gainers in the region with a rise of 0.8% followed by increases in Argentina of 0.76%, in Brazil of 0.6% and in Chile of 0.1%.

Peru led decliners in the region with a loss of 2.7% followed by losses in Colombia of 1% and in Venezuela of 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 114.24 or 2.74% to 4,049.37, in Paris CAC 40 Index decreased 173.15 or 5.48% to close at 2,988.01 and in Frankfurt DAX index lower 182.76 or 4.00% to close at 4,381.47. In Zurich trading SMI decreased 118.30 or 2.09% to close at 5,530.84.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 6.73 or 0.08% to 7,917.51, Hang Seng index in Hong Kong increased 336.31 or 2.49% closed to 13,846.09 CSI 300 index in China higher 30.25 or 1.53% closed to 2,013.18. ASX 200 index in Australia decreased 42.50 or 1.20% to close 3,489.90. The KL Composite index in Malaysia lower 8.58 or 1.01% closed to 838.28.

The Kospi Index in South Korea increased 21.59 or 2.14% to close at 1,028.13. JSE Index in Indonesia increased 2.98 or 0.25% to 1,202.34. The Sensex index in India decreased 264.55 or 2.87% closed to 8,965.20. Markets of Thailand were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $2.03 to close at $41.64 a barrel for a front month contract, natural gas decreased 26 cents to $5.76 per mBtu and gasoline futures decreased 4.85 cents to close at 92.10 cents per gallon.

Wheat futures closed down 10.50 cents in Chicago trading and closed at $4.75 a bushel. Sugar decreased 0.23 cent to 10.57 cents a pound. Soybean future closed down 27.50 cent to $7.83 a bushel.

Gold decreased $8.50 in New York trading to close at $757.00 per ounce, silver closed up 1 cent to $9.53 per ounce and copper for the front month delivery decreased 5.50 cent to $1.414 per pound.

Dollar edged higher against euro to $1.2734 and rose against yen to 92.82.

Yields on 10-year U.S. bonds increased to 2.70% and with 30-year maturities increased to 3.12%.