U.S. Stocks Rebound; Banks Surge

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

Stocks in New York rose on the anticipation of Obama administration bank rescue plan. Banks surged after executives and directors at the Bank of America purchased shares. Asian stock may rebound in the trading after dropping sharply today.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – Stocks in New York rose on the anticipation of Obama administration bank rescue plan. Banks surged after executives and directors at the Bank of America purchased shares.[/R]

U.S. stocks rebounded on the hopes that the Obama administration will propose a plan to support banks and increase lending through the financial system. The Treasury Secretary nominee Timothy Geithner informed the Congress that a comprehensive plan to rescue banks will be released soon. The Treasury may opt for the purchase of troubled assets, injecting capital in the bank of or aggregate bad assets into a bad loan.

Banks surged after chief executive of Bank of America and five directors purchased shares. Bank of America surged 31%, Citigroup galloped 31.5% and Morgan Stanley and JP Morgan rose more than 25%.

U.K. jobless claims increase 77,900 in December. Barclays plunged 9% on the unsubstantiated rumors that the lender may face nationalization. Banks rebounded in trading after falling sharply in the last three sessions. The Bank of England is likely to purchase assets from banks directly.

Stocks in Tokyo dropped 2% as global market weakness and continued worries with banking sector in the U.S. and UK resurfaced. Most banks in Japan and in Asia fell as more capital will be needed by the banks to restore balance sheets. Shipping industry export orders plunged 91% in December.

Hong Kong exports decline 7.1% in November. Global worries dragged the bench mark index in Hong Kong and in Shanghai. Banks and insurance companies fell the most. China Life dropped 7.5% after it estimated a profit decline of 50%.

Sensex in India dropped 3.5% and the index fell below 9,000 for the first time in three years. Global market weakness and new worries of the banking sector in the U.S. and UK dragged confidence in Asian markets including India. Satyam founder admitted of diverting company funds to other ventures.

Australian confidence dips to low as hopes of economic recovery fades and home prices decline in December. The recent fall in fuel prices dragged the inflation lower but consumer confidence remains low. Despite a rise in crude oil and commodities prices, stocks declined.

American Markets Reviews

Dow Jones Industrial Average increased 279.01 or 3.51% to a close of 8,228.10, S&P 500 increased 35.02 or 4.35% to 840.24, and Nasdaq Composite Index increased 66.21 or 4.6% to a close of 1,507.07. In Toronto TSX Composite increased 252.96 or 2.96% to close at 8,757.89.

In South American trading Brazil Bovespa Index increased 3.4% or 1,270.83 to 38,542.90 and Mexico Bolsa Index edged higher 1.5% or 284.08 to 19,497.10.

Argentina increased 1.7%, Chile decreased 0.4%, Peru declined 0.4% and Colombia edged lower 0.46%. Venezuela added 0.27%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 457 increased, 41 declined and 2 were unchanged.

Coach Inc led decliners in the index with a loss of 7.3% followed by losses in Allegheny Technology of 6.8%, in Fifth Third Banc of 5.5%, in Johnson Controls of 5.2%, in MEMC Electric Material of 4.8%, in King Pharmaceuticals of 3.3% and in Wal-Mart Stores of 2.8%.

PNC Financial Services led gainers in the index with a rise of 38% followed by increase in Citigroup of 31.1%, in Bank of America of 31.6%, in Northern Trust of 30.9%, in Morgan Stanley of 28.7% and in JP Morgan Chase of 25%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 164.15 or 2.04% to 7,901.64, Hang Seng index in Hong Kong decreased 376.14 or 2.90% closed to 12,583.63 CSI 300 index in China lower 3.48 or 0.17% closed to 2,021.71. ASX 200 index in Australia decreased 33.80 or 0.97% closed to 3,442.80. The KL Composite index in Malaysia lower 6.96 or 0.79% closed to 873.41.

The Kospi Index in South Korea decreased 23.20 or 2.06% to close at 1,103.61. SET index in Thailand closed lower 1.96 or 0.45% to 431.23 and JSE Index in Indonesia decreased 22.70 or 1.69% closed to 1,321.45. The Sensex index in India decreased 321.38 or 3.53% closed to 8,779.17.

Europe Markets Review

In London FTSE 100 Index closed lower 31.52 or 0.77% to 4,059.88, in Paris CAC 40 Index decreased 19.71 or 0.67% to close at 2,905.57 and in Frankfurt DAX index higher 21.30 or 0.50% to close at 4,261.15. In Zurich trading SMI decreased 16.83 or 0.32% to close at 5,304.17.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.54% and on 30-year bonds were unchanged to 3.17%.

The U.S. dollar rose to $1.3070 to a euro and against the Japanese yen fell to 89.40 yen.

Immediate futures prices of Texas crude oil increased to $3.00 to $43.84 a barrel, for natural gas increase 17 cents to $4.82 per mbtu and gasoline prices decreased 0.06 cents to 147.35 cents a gallon.

Futures of corn increased 6.75 cent to $3.9025, soybean increased 28.50 cents to $10.205, sugar increased 0.01 cents to 12.60 a pound and wheat increased 21.750 cent to $5.7175 a bushel.

In metals trading, copper prices fell 2.75 cents to $1.47 a pound, gold increased $0.10 to $855.30 per ounce and silver was increased 13 cents to $11.305.