GE Views Drag Stocks Lower; Oil Plunges 10%

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

U.S. stocks fell after S&P put General Electric debt on watch with negative outlook. The surprise announcement turned trading sentiment negative. In addition, crude oil futures dropped 9.6% to $36 a barrel.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– U.S. Stocks dropped after S&P raised possibilities of dropping its highest rating for General Electric debt. UK retail sales rose in November, surprising the market. China unveils stimulus for home buyers.[/R]

Global Markets

U.S. automakers struggle while White House and Treasury avoid bailout plan endangering the industry and 3 million jobs in the industry. The U.S. Congress is deeply concerned how Treasury has handled TARP. The British pound drops again. Hyper market retailer Carrefour SA lowers sales guidance for the second time.

U.S. stocks declined with leading indexes down 2.5%. Rating agency S&P put GE Capital debt on watch with negative outlook. The ratings view dragged markets lower after it said that the diversified industrial conglomerate may lose its highest rating in the next two years if cash flow decline.

MEMC Electric fell on lowered sales outlook. Discover Financial surged on better than expected earnings. A fall in oil prices dragged oil complex stocks and steel makers.

UK retail sales in November rose 0.3% from October. The unexpected rise in sales was supported by a rise in sales of food, household goods and other items. The pound falls to a record low against the euro on the expectations of a drop in interest rates and high government borrowings.

Japan stocks rise on interest rate cut hopes. Winter bonuses fall 0.4%, a decline for the first time in six years. Auto sales in 2009 are expected to fall below 5 million vehicles for the first time in 31 years.

China unveiled another stimulus package focused on low income housing market. The government will lower taxes on capital gains on sales and offer cheaper financing for the second apartment purchase. In Hong Kong, property developers rose and lifted indexes in Hong Kong and in China.

Annualized inflation rate in India falls to 6.84% at the end of the first week in December. Indian government is seeking additional $9 billion for fiscal spending in year through March 2009. The benchmark Sensex index closes above 10,000.

Leading Australian banks caution shareholders of rising bad debt expenses in 2009. Slowing economy and weak job market are expected to increase bad debt expenses at Commonwealth Bank to 60 basis points from 40. ANZ also cautioned of rising expenses.

North American Markets

Dow Jones Industrial Average lost 219.35 or 2.5% to a close of 8,604.99, S&P 500 Index decreased 19.14 or 2.12% to 885.28, and Nasdaq Composite Index declined 26.94 or 1.71% to close at 1,552.37. In Toronto, TSX Composite Index declined 3.4% or 298.76 to 8,425.35.

Of the stocks in Dow Jones Industrial Average 5 increased and 25 declined.

General Motors led decliners in the Dow with a loss of 16.3% followed by losses in General Electric of 8.2%, in Intel Corp of 6.6%, in Alcoa Inc of 5.60%, in Caterpillar Inc of 5.6% and in JP Morgan Chase of 5.2%.

Merck & Company led gainers in the Dow with a rise of 2.3% followed by increase in United Technologies Corp of 0.4%, in Wal-Mart Stores of 0.4%, in Johnson & Johnson of 0.4% and in Boeing Company of 0.1%.

Of the stocks in S&P 500 index, 133 increased, 365 decreased and 2 were unchanged. Of the index stocks, 176 fell more than 3%, 25 closed above 3%. Of the index stocks 27 dropped more than 10%.

General Motors led decliners in S&P 500 index with a fall of 16.3% followed by losses in Federated Investments of 16%, in Nabor Industries Ltd of 15.9%, in Ensco International of 13.8%, in Transocean Inc of 13% and in MEMC Electric Material of 12.8%.

Micron Tech led gainers in S&P 500 index with a surge of 20.3% followed by increases in XL Capital Ltd of 10.4%, in Coca-Cola Enterprises of 8.4%, in Discover Financial of 7.9% and in Pepsi Bottling of 7.7%.

South American Markets Indexes

Peru led decliners in the region with a loss of 2.93% followed by losses in Argentina of 2.75%, in Colombia of 1.9%, in Brazil of 1.03% and in Mexico of 1.00%.

Chile and Venezuela rose 0.16%.

Europe Markets Review

In London FTSE 100 Index closed higher 6.47 or 0.15% to 4,330.66, in Paris CAC 40 Index decreased 7.77 or 0.24% to close at 3,241.92 and in Frankfurt DAX index higher 48.02 or 1.02% to close at 4,756.40. In Zurich trading SMI decreased 33.15 or 0.60% to close at 5,515.05.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 54.71 or 0.64% to 8,667.23, Hang Seng index in Hong Kong increased 37.29 or 0.24% closed to 15,497.81 CSI 300 index in China higher 43.68 or 2.18% closed to 2,045.10. ASX 200 index in Australia increased 10.60 or 0.30% to close 3,581.20. The KL Composite index in Malaysia higher 18.00 or 2.09% closed to 880.50.

The Kospi Index in South Korea increased 6.16 or 0.53% to close at 1,175.91. SET index in Thailand closed higher 5.78 or 1.30% to 451.72 and JSE Index in Indonesia decreased 12.22 or 0.90% to 1,351.76. The Sensex index in India increased 361.14 or 3.72% closed to 10,076.43.

Commodities, Metals, and Currencies

Crude oil decreased 9.2% or $3.68 to close at $36.38 a barrel for a front month contract, natural gas decreased 7 cents to $5.55 per mBtu and gasoline futures decreased 2.10 cents to close at 98.45 cents per gallon.

Wheat futures closed up 12.25 cents in Chicago trading and closed at $5.90 a bushel. Sugar increased 0.10 cent to 11.83 cents a pound. Soybean future closed up 5.5 cent to $8.74 a bushel.

Gold decreased $14.00 in New York trading to close at $854.50 per ounce, silver closed down 47 cent to $10.95 per ounce and copper for the front month delivery decreased 8.15 cents to $1.2915 per pound.

Dollar edged lower against euro to $1.4271 and rose against yen to 89.5585.

Yields on 10-year U.S. bonds decreased to 2.08% and with 30-year maturities decreased to 2.52%.