U.S. Stocks Ease, Oil Drops to $40

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

U.S. stocks scaled back from a surge of 4% in the previous session on the worries that the Fed less room to maneuver. Macys led gainers in the S&P 500 index and Newell Rubbermaid led decliners. UK unemployment soars to 6%. Hong Kong lowered its key lending rate in step with the Fed.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– U.S. stocks scaled back from a surge of 4% in the previous session on the worries that the Fed less room to maneuver. UK unemployment soars to 6%. Hong Kong lowered its key lending rate in step with the Fed.[/R]

Global Markets

U.S. stocks fell a day after investors cheered the record low interest rate. Investors focused on the lack of Fed ability to set interest rates as it runs of its traditional role and Fed’s willingness to buy mortgage backed assets. The Fed may be overreaching as it has nearly tripled its balance sheet by printing money to $2.2 trillion.

Macy’s led gainers in the index with a surge of 14% after it renegotiated terms of its bank debt. Tesoro gained on a fall in crude oil price below $40 a barrel. Newell Rubbermaid fell the most among index stocks after it lowered its current quarter earnings outlook.

Constellation Energy Group dropped 20%, the second worst decline in the S&P 500 index, after it agrees to sell 50% stake in its nuclear power business to Electricite de France SA for $4.5 billion. The deal between the company and the European electric giant prompted Moody’s to lower its debt rating to the lowest investment grade. MidAmerican Energy Holdings, controlled by billionaire Warren Buffett was in preliminary agreement with the company.

U.K. unemployment rate soars to 6% in the three months to October, a rise of 0.4 percentage points from the previous quarter. The retailer under administration, Woolworth faces closure at the end of first week in January, unless it finds a buyer.

Japan stocks rose 0.5% after the U.S. Federal Reserve cut its rates from 1% to record low range. Investors speculated that the Bank of Japan will also lower its base rate at its next monetary policy meeting. Automakers however trimmed gains after Honda lowered its outlook.

Hong Kong Monetary Authority lowered its key lending rate to 0.5% following the rate cut in the U.S. Stocks rose after a rally in banks and realty sectors. State owned companies in China reported revenue rise of 20% in the first eleven months but profits declined 26% on weak energy sector.

Stocks in Mumbai fell after Satyam Computer suggested a plan to acquire a company controlled by its chairman. The company was forced to cancel the plan after the stock plunged more than 35%. Reserve Bank of India in its annual report suggested that economic growth may slow on global worries.

Australian skilled workers job vacancies decline 7.2% in December. Australia leading index of economic indicators eases to 0.6% in October. CBA completed A$2 billion capital raising after it dropped Merrill Lynch from the underwriting team. The troubled mall operator, Centro Retail Group surged 42%.

North American Markets

Dow Jones Industrial Average lost 99.80 or 1.2% to a close of 8,824.34, S&P 500 Index decreased 8.76 or 0.96% to 904.42, and Nasdaq Composite Index fell 10.58 or 0.67% to close at 1,579.31. In Toronto, TSX Composite Index was unchanged to 8,724.11.

Of the stocks in Dow Jones Industrial Average 6 increased and 24 declined.

Citigroup Inc led decliners in the Dow with a loss of 4.9% followed by losses in Bank of America of 3.2%, in General Electric of 2.96%, in Merck & Company of 2.83% and in Chevron Corp of 2.8%.

General Motors led gainers in the Dow with a rise of 2.8% followed by increase in Caterpillar Inc of 1.9%, in Verizon Communication of 1.7%, in Home Depot of 1.6% and in 3M Company of 0.7%.

Of the stocks in S&P 500 index, 227 increased, 272 decreased and one was unchanged. Of the index stocks, 58 fell more than 3%, 73 closed above 3%.

Newell Rubbermaid led decliners in S&P 500 index with a fall of 27.3% followed by losses in Constellation Energy of 20%, in Genworth Financial of 10.3%, in National City Corp of 7.8%, in Omnicom Group of 7.2% and in Apple Inc of 6.6%.

Macy’s Inc led gainers in S&P 500 index with a surge of 18% followed by increases in Tesoro Corp of 12.3%, in Limited Brands of 10%, in Wyndham Worldwide of 8.8% and in ConAgra Foods of 8%.

South American Markets Indexes

Mexico led gainers in South American region with a rise of 2.5% followed by increases in Venezuela of 1.7%, in Chile of 0.51% and in Argentina of 0.41%.

Colombia led decliners in the region with a loss of 0.8% followed by losses in Peru of 0.5% and in Brazil of 0.12%.

Europe Markets Review

In London FTSE 100 Index closed higher 15.11 or 0.35% to 4,324.19, in Paris CAC 40 Index decreased 9.74 or 0.30% to close at 3,241.92 and in Frankfurt DAX index lower 21.53 or 0.46% to close at 4,708.38. In Zurich trading SMI decreased 18.94 or 0.34% to close at 5,548.20.


Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 44.50 or 0.52% to 8,612.52, Hang Seng index in Hong Kong increased 330.31 or 2.18% closed to 15,460.52 CSI 300 index in China higher 6.97 or 0.35% closed to 2,001.42. ASX 200 index in Australia increased 14.40 or 0.40% to close 3,570.60. The KL Composite index in Malaysia higher 7.70 or 0.90% closed to 862.50.

The Kospi Index in South Korea increased 8.19 or 0.71% to close at 1,169.75. SET index in Thailand closed higher 0.63 or 0.14% to 445.94 and JSE Index in Indonesia increased 21.15 or 1.57% to 1,363.98. The Sensex index in India decreased 261.69 or 2.62% closed to 9,715.29.

Commodities, Metals, and Currencies

Crude oil decreased $3.54 to close at $40.06 a barrel for a front month contract, natural gas decreased 13 cents to $5.62 per mBtu and gasoline futures decreased 3.45 cents to close at 100.55 cents per gallon.

Wheat futures closed up 13.25 cents in Chicago trading and closed at $5.78 a bushel. Sugar increased 0.06 cent to 11.73 cents a pound. Soybean future closed up 6 cent to $8.69 a bushel.

Gold increased $25.80 in New York trading to close at $868.50 per ounce, silver closed up 71 cent to $11.42 per ounce and copper for the front month delivery decreased 0.55 cents to $1.3730 per pound.

Dollar edged lower against euro to $1.4416 and fell against yen to 87.315.

Yields on 10-year U.S. bonds decreased to 2.19% and with 30-year maturities decreased to 2.65%.