S&P 500 Falls 3%, Intel Worries; Oil Plunges

123jump.com Staff
07 Jan, 2009
New York City

U.S. stocks declined sharply and erased the gains of the year. Earnings worries dominated trading sentiment. Marks & Spencer sales declined less than forecasted. Satyam plunged after the chairman resigned and admitted financial irregularity.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks declined sharply and erased the gains of the year. Earnings worries dominated trading sentiment. Marks & Spencer sales declined less than forecasted. Satyam plunged after the chairman resigned and admitted financial irregularity.[/R]

U.S. market indexes declined sharply on the earning worries, falling employment and fall in commodities prices. Crude oil prices declined nearly 10%. Intel forecasted lower than expected sales and the largest aluminum maker Alcoa laid off 13% staff and cut production target.

Satyam Computer Services plunged 91% after Chairman resigned and admitted financial irregularity. Alcoa fell more than 10% on a restructuring plan and production cut. Casino stocks fell further on weak consumer spending. Time Warner Inc will record $25 billion of non-cash charge and a loss.

In the UK, Scottish & Southern Energy to issue 40 million shares worth £500 million. Marks & Spencer group sales decline 1.2% in 13 weeks to December, better than previously forecasted. The retailer will trim staff and close non-performing stores. Man Group led decliners in the FTSE 100 index shares.

Japanese retailer Aeon Co Ltd forecasted its first annual loss in seven years. Sales in the first eleven months ending in November declined 1.2%. Listed companies in Japan are looking for a profit gain of 10% in the fiscal year ending in March 2009.

Stocks in Mumbai plunge after Satyam Chairman admitted inflating balance sheet, cash reserve and sales for the last five year. The fourth largest software export company is also listed on the New York Stock Exchange. The benchmark index Sensex plunges 7%.

China issues 3G licenses to three mobile operators. Bank of America sells $2.83 billion stake in Construction Bank of China and lowers its stake to above 16%. The benchmark Stock index in Hong Kong fell 3.4% and in Shanghai edged 0.6% lower. Telecom stocks fell on profit taking.

In weak trading in Sydney, stocks closed higher ahead of earnings release. November retail sales rose 0.1% and new home sales declined 1.1% in the month. Oil and gas company Santos revived its A$1.8 billion plan to develop and supply natural gas from a field in Western Australia.

U.S. Market Review

Dow Jones Industrial Average lost 2.7% or 245.40 to close at 8,769.70, S&P 500 index declined 3% or 28.05 to close at 906.65 and Nasdaq index declined 3.23% or 53.32 to close at 1,599.06. In Toronto trading TSX Composite index declined 3.7% or 350.77 to close at 9.121.32.

U.S. Index Stock Movers

Of the stocks in S&P 500 index, 451 declined, 45 increased and 2 were unchanged.

American Capital led decliners in the S&P 500 index with a loss of 18.6%, followed by losses in Office Depot of 15%, in Lincoln National Corp of 13.5%, in JDS Uniphase of 12.6%, in Massey Energy of 12.6% and in 12%.

Monsanto Company led gainers in the index with a rise of 17% followed by increases in Family Dollar of 13.4% in Supervalu Inc of 11%, in Tenet Healthcare of 8% and in XL Capital of 6.6%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 158.40 or 1.74% to 9,239.24, Hang Seng index in Hong Kong decreased 522.05 or 3.37% closed to 14,987.46 CSI 300 index in China lower 11.62 or 0.60% closed to 1,931.18. ASX 200 index in Australia increased 37.00 or 0.99% to close 3,779.70. The KL Composite index in Malaysia higher 5.39 or 0.58% closed to 927.62.

The Kospi Index in South Korea increased 33.89 or 2.84% to close at 1,228.17. SET index in Thailand closed lower 10.19 or 2.15% to 462.96 and JSE Index in Indonesia decreased 14.07 or 0.98% closed to 1,421.47. The Sensex index in India decreased 749.05 or 7.25% closed to 9,586.88.

Europe Markets Review

In London FTSE 100 Index traded lower 58.54 or 1.26% to 4,580.38, in Paris CAC 40 Index increased 6.63 or 0.20% to 3,402.85 and in Frankfurt DAX index traded lower 40.69 or 0.81% to 4,985.62. In Zurich trading SMI increased 3.55 or 0.06% to 5,802.86.

South American Markets Review

Mexico Bolsa Index declined 3.86% or 887.90 to 22,117.51, Argentina Merval Index 3.9% or 47.22 to 1,167.06 and Brazil Bovespa Stock Index fell 3.5% or 1,492.03 to 40,820.25.

Peru Lima General Index declined 2.6% to 7,248.34, Colombia declined 1.7% to 7,719.71 and Chile Stock Market Select index declined 1% to 2,478.90.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.49% and on 30-year bonds gained to 3.03%.

The U.S. dollar increased to $1.3635 to a euro and against the Japanese yen fell to 92.63 yen.

Immediate futures prices of Texas crude oil fell $5.72 to $42.86 a barrel, for natural gas increase 12 cents to $5.87 per mbtu and gasoline prices increased 0.57 cents to 118.81 cents a gallon.

Futures of corn decreased 11 cent to $4.16, soybean decreased 26 cents to $9.90, sugar decreased 0.29 cents to 11.98 a pound and wheat fell 33 cents to $6.37 a bushel.

In metals trading, copper prices dropped 7.95 cents to $1.5035 per pound, gold decreased $25.30 to $840.70 per ounce and silver decreased 44 cents to $11.00.