U.S. stocks Drop, Alcoa Loss

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

U.S. stocks declined on the earnings worries and weakening economic sentiment. Alcoa Inc after the close, reported its first quarterly loss. Crude oil plunged 8% and metals prices fell sharply. Gold, silver and copper declined. Russia devalued its currency and may be forced to do more.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – Earnings worries and weak climate dragged metals and crude oil prices. Alcoa reported its first quarterly loss in six years.[/R]

Citigroup is at advanced state of discussion to sell a controlling stake in Smith Barney to Morgan Stanley. The newly merged brokerage operation will be jointly owned by two battered investment banks. The merged operation is expected to be valued at $20 billion.

Alcoa Inc, the largest aluminum company in the world, reported quarterly loss of $1.19 billion or $1.49 a share compared to net income of $632 million or 75 cents a share. Net sales declined 19% to $5.69 billion.

Crude oil futures for the immediate month delivery fell after Saudi Arabia lowered its production target below OPEC-agreed target by 300,000 barrels a day. Oil traded as low as $38.20 a barrel in the morning trading but March and April months futures are trading at 15% and 20% premium.

Russia, battling a sharp drop in crude oil prices, lack of foreign investors’ confidence and worsening capital flight devalued the currency 2% over the weekend. The ruble is likely to drop as much as 15% in the next six months if oil stays below $50 a barrel.

The UK stocks closed lower as prices of metals and crude oil declined. Financial companies in an industry survey reported a sharp decline in income, profitability. Businesses and consumers are still struggling to get loans from lenders. Scottish Court approved Lloyds TSB and HBOS merger.

Stocks in Hong Kong fell and in Shanghai edged higher as business climate deteriorated. The latest survey in China indicated weakening confidence and a decline in business activities across all industrial sectors. Casino stocks rebounded after the expected travel visa restrictions were not imposed.

Stocks in Mumbai trading fell on the worries that more companies are behind in keeping high corporate governance standards. The BSE reported that nearly 1,200 companies may be in violation in filing such reports. In another blow, Wipro was barred by the World Bank in doing business with it.

Australian job placements ads drop 9.7% in December. Job placement ads in the metropolitan cities declined sharply as businesses scale back hiring. Rio Tinto shelves $2.15 billion plan to explain iron ore mining in Brazil. Stocks in Sydney trading fell with the benchmark index ASX 200 declining 1.4%.

American Markets Reviews

Dow Jones Industrial Average fell 125.21 or 1.46% to a close of 8,473.97, S&P 500 decreased 20.09 or 2.26% to 870.26, and Nasdaq Composite Index declined 32.80 or 2.09% to a close of 1,538.79. In Toronto TSX Composite decreased 291.85 or 3.21% to close at 8,793.33.

In South American trading Brazil Bovespa Index declined 5.2% to 39,403.47 and Mexico Bolsa Index dropped 2.7% or 579.02 to 21,162.27.

Argentina dropped 4.4%, Chile lost 1.3%, Peru declined 0.7% but Colombia gained 0.6%.

In Caribbean trading Jamaica Market Index gained 1.1% to 85,922.99.

U.S. Stock Movers

Of the 30 stocks in Dow Jones Industrial Average, 5 increased and 25 declined.

Citigroup Inc led decliners in the Dow with a loss of 17% followed by losses in Bank of America with a loss of 12%, in Alcoa Inc of 6.9%, in Caterpillar Inc of 4.7%, in JP Morgan Chase of 4.1%.

General Motors led gainers in the Dow with a rise of 3% followed by increases in Kraft Foods Inc of 2.7%, in IBM of 1.2%, in McDonalds Corp of 0.2% and in Procter & Gamble of 0.13%.

Of the stocks in S&P 500 index, 72 declined, 427 increased and 1 was unchanged.

Developers Diversified Corp led decliners in the S&P 500 index with a loss of 21% followed by losses in Hartford Financial Services of 18.6%, in Citigroup Inc of 17.1%, in XL Capital Ltd of 17.1%, in Lincoln National Corp 13% and in Prudential Financial of 12.9%.

SLM Corp led the gainers in S&P 500 index with a rise of 6% followed by increase in Supervalu Inc of 5.7%, in Varian Medical of Corp of 5.5%, in Mylan Inc of 3.4% and in General Mills of 3%.

Asian Markets Review

Hang Seng index in Hong Kong decreased 406.44 or 2.83% closed to 13,971.00 CSI 300 index in China higher 2.32 or 0.12% closed to 1,920.69. ASX 200 index in Australia decreased 52.40 or 1.40% to close 3,683.30. The KL Composite index in Malaysia higher 4.50 or 0.49% closed to 923.57. Markets of Japan were closed today.

The Kospi Index in South Korea decreased 24.21 or 2.05% to close at 1,156.75. SET index in Thailand closed lower 6.26 or 1.36% to 452.80 and JSE Index in Indonesia increased 10.12 or 0.71% closed to 1,406.55. The Sensex index in India decreased 296.42 or 3.15% closed to 9,110.05.

Europe Markets Review

In London FTSE 100 Index closed lower 22.35 or 0.50% to 4,426.19, in Paris CAC 40 Index decreased 53.38 or 1.62% to close at 3,246.12 and in Frankfurt DAX index lower 64.27 or 1.34% to close at 4,719.62. In Zurich trading SMI decreased 105.45 or 1.85% to close at 5,591.79.

Commodities, Bonds and Currencies

Yields on 10-year bond declined to 2.30% and on 30-year bonds were unchaged to 2.99%.

The U.S. dollar increased to $1.3364 to a euro and against the Japanese yen fell to 89.217 yen.

Immediate futures prices of Texas crude oil declined $3.13 to $37.70 a barrel, for natural gas increase 1 cents to $5.53 per mbtu and gasoline prices decreased 2.05 cents to 109.07 cents a gallon.

Futures of corn decreased 30 cent to $3.80, soybean decreased 70 cents to $9.66, sugar decreased 0.58 cents to 11.47 a pound and wheat declined 59.75 to $5.6975 a bushel.

In metals trading, copper prices fell 9 cents to $1.467 per pound, gold decreased $33.90 to $821.10 per ounce and silver decreased 69 cents to $10.63.