U.S. Stocks Slip, General Motors Worries

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

U.S. stocks fell on the worries that General Motors may need more funding, weakness in insurance stocks and worsening economic outlook. Irealnd was forced to inject 5.5 billion in emergency capital to save three largest bank. China lowered is rate for the fifth time and Toyota slashed its earnings.

4:30PM New York, 10:30PM Frankfurt, 7:30AM Sydney[R]– U.S. stocks declined ahead of the end of quarter and weak holiday sales. Ireland was forced to bailout three largest banks. China rate cut was smaller than expected. [/R]

Global Markets

U.S. stocks dropped for the fourth day in a row on the worries that economic outlook may be weaker than expected and proposed stimulus package will not save economic growth. Insurance and financials declined. Crude oil fell.

Miners and insurers fell in London trading. UK home prices are expected to decline 10% after falling 9% in the current year. The European Commission approves Electricite de France acquisition of British Energy. Pound inches near parity with the euro. Ireland pumps 5.5 billion euros in banks.

Tokyo stock market averages jumped more than 1.6% after the Bank of Japan expanded its asset purchase plan to commercial debts. November export from Japan dropped 27%. Toyota cut its net income for the fiscal year by 91% and projected operating loss. Sales estimates were cut by 18%.

Central bank in China lowered interest rate for the fifth time in a row however, the size of rate cut surprised most economists. China is still hoping that economic stimulus, rate cuts and reduced cash reserve ratios will sustain economic growth at 8%.

India plans to introduce new tax code to prevent treaty shopping. Oil prices may be lowered before the election announcement. Banks lower rates to sustain lending. State Bank of India, Bank of Baroda and HDFC Bank passed on recent cut in rates to borrowers.

Australian stocks fell after Fortescue Metals Ltd. said it issued 1.55 million shares for A$3.65 million to pay contractor bills for changes made to shipping contracts. Arrow Energy proposes to acquire Pure Energy for A$2.70 cash and 1.21 Arrow shares.

North American Markets

Dow Jones Industrial Average lost 59.42 or 0.7% to a close of 8,519.69, S&P 500 Index decreased 16.25 or 1.83% to 871.63, and Nasdaq Composite Index declined 31.97 or 2.1% to close at 1,532.35. In Toronto, TSX Composite Index decreased 3.5% or 302.47 to 8,249.53.

Of the stocks in Dow Jones Industrial Average 11 increased and 19 declined.

General Motors led decliners in the Dow with a loss of 21.6% followed by losses in American Express of 5.2%, in Alcoa Inc of 4.9%, in Citigroup Inc of 3.90%, in General Electric of 2.6% and in E.I du Pont of 2.4%.

Merck & Company led gainers in the Dow with a rise of 1.9% followed by increase in McDonalds Corp of 1.8%, in United Technologies Corp of 0.7%, in Kraft Foods Inc of 0.7% and in Verizon Communication of 0.7%.

Of the stocks in S&P 500 index, 84 increased, 413 decreased and 3 were unchanged. Of the index stocks, 213 fell more than 3%, 2 closed above 3%. Of the index stocks 16 plunged more than 10%.

Dynegy Inc led gainers in the S&P 500 index with a rise of 4.2% followed by increase in Newell Rubbermaid of 4.1%, in Kimberly-Clark of 2.6%, in AON Corp of 2.4%, in Pepsi Bottling 2.3% and in Stryker Corp of 2.8%.

General Motors led decliners in the S&P 500 index with a loss of 21.6% followed by declines in LSI Corp of 17.8%, in Jones Apparel of 15.5% and in Sprint Nextel of 15%.

South American Markets Indexes

Argentina led decliners in the region with a loss of 4.6% followed by losses in Brazil of 3.9%, in Peru of 1.2%, in Mexico of 0.70%, in Chile of 0.5% and in Venezuela of 0.1%.

Colombia was the lone gainer in the region with a rise of 0.5%.

In the Caribbean trading, Jamaican Stock Exchange edged up 0.17% to 78,814.06 after dropping 1.1% to a new low of 78,677.01 from 106,779 a year. Jamaican dollar has been under pressure on the worries that tourism revenues in the first of 2009 may fall as much as 25%.

Europe Markets Review

In London FTSE 100 Index closed lower 37.77 or 0.88% to 4,249.16, in Paris CAC 40 Index decreased 74.54 or 2.31% to close at 3,151.36 and in Frankfurt DAX index lower 57.68 or 1.23% to close at 4,639.02. In Zurich trading SMI decreased 40.34 or 0.74% to close at 5,419.52.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 135.26 or 1.57% to 8,723.78, Hang Seng index in Hong Kong decreased 505.12 or 3.34% closed to 14,622.39 CSI 300 index in China lower 34.56 or 1.68% closed to 2,017.55. ASX 200 index in Australia decreased 58.30 or 1.61% to close 3,557.40. The KL Composite index in Malaysia lower 2.97 or 0.34% closed to 873.43.

The Kospi Index in South Korea decreased 1.36 or 0.12% to close at 1,179.61. SET index in Thailand closed lower 12.93 or 2.89% to 434.08 and JSE Index in Indonesia decreased 2.98 or 0.22% to 1,345.31. The Sensex index in India decreased 171.56 or 1.70% closed to 9,928.35.

Commodities, Metals, and Currencies

Crude oil decreased 5.8% or $2.45 to close at $39.91 a barrel for a front month contract, natural gas increased 2.3 cents to $5.36 per mBtu and gasoline futures decreased 8.49 cents to close at 88.45 cents per gallon.

Wheat futures closed up 5.75 cents in Chicago trading and closed at $5.69 a bushel. Sugar decreased 0.10 cent to 10.85 cents a pound. Soybean future closed up 18 cent to $8.90 a bushel.

Gold increased $10.80 in New York trading to close at $848.20 per ounce, silver closed down 2 cent to $10.83 per ounce and copper for the front month delivery increased 1.45 cents to $1.34 per pound.

Dollar edged lower against euro to $1.3936 and fell against yen to 90.19.

Yields on 10-year U.S. bonds increased to 2.17% and with 30-year maturities increased to 2.61%.