U.S. Stocks Drop, Weak Home Sales

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

U.S. stocks dropped ahead of the GDP report and on weak employment and new home sales. The sales declined to 45-year low to annual rate of 331,000. Unemployment claims rose to 4.8 million at the end of the last week. President Obama urged Wall Street to reconsider $18 billon of bonus.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks dropped ahead of the GDP report and on weak employment and new home sales.[/R]

U.S. stocks dropped after rising for four days in a row. Home sales fell to the lowest level annual pace in 45 years to the annual level of 331,000 according to the Commerce Department. Total number of unemployment claims rose to 4.8 million. Ahead of the GDP report tomorrow, economists are estimating the economy to shrink between 5% and 6% in the fourth quarter of last year.

Textron, Eastman Kodak and Allstate plunged after the companies reported a quarterly loss. Eastman Kodak announced plan to lay-off as many as 4,500. DryShips plunged on $500 million secondary offering.

The U.K. government approves £50 billion bonds and commercial paper purchase by the Bank of England. Xstrata plans to raise £4.1 billion from rights issue sparking fears that more companies will dilute their shareholders with new stock offerings. The benchmark index in London trading dropped 2.5%.

The latest read on monthly inflation at the end of previous week in India edged higher, however inflation remains subdued. India is likely to announce third stimulus package. Stocks in Mumbai trading fell after rising 6% for the week. Indian Hotels profit surged 38% and BHEL rose ahead of earnings.

Hong Kong left its key rate unchanged following the similar move by the U.S. Federal Reserve. The new mortgage loans origination declined in December in Hong Kong. Oil consumption rose at a slower pace in 2008 in China but production increased at a faster pace.

New Zealand aggressively cut its benchmark lending rate to 3.5% from 5% as the central bank lowers its view on the global economic conditions and prospects of higher exports. Stocks in Australia edged higher 0.9% on higher commodities prices.

American Markets Reviews

Dow Jones Industrial Average decreased 226.44 or 2.70% to a close of 8,149.01, S&P 500 decreased 28.95 or 3.3% to 845.14, and Nasdaq Composite Index decreased 50.50 or 3.2% to a close of 1,507.84. In Toronto TSX Composite decreased 143.47 or 1.6% to close at 8,762.76.

In Latin American trading Brazil Bovespa Index decreased 1.5% or 589.03 to 39,638.42 and Mexico Bolsa Index edged lower 3% or 608.17 to 19,537.05.

Argentina fell 1.5%, Chile declined 0.3%, Peru decreased 0.2% and Colombia edged lower 0.07%. Venezuela edged higher 1.2%.

U.S. Stock Movers

Of the Stocks in S&P 500 index, 31 increased, 469 declined and none were unchanged.

Textron Inc led the decliners in the S&P 500 index with a loss of 29.7% followed by losses in Eastman Kodak of 26.5%, in Allstate Corp of 21.4%, in Black & Decker of 18% and Lincoln National Corp of 17.3%.

Autonation Inc led the gainers in the S&P 500 index with a rise of 6.8%, in Symantec Corp of 5.7%, in SLM Corp of 4.6%, in St. Jude Medical of 3.4%, in Boston Scientific of 2.6%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 144.95 or 1.79% to 8,251.24 , Hang Seng index in Hong Kong increased 575.83 or 4.58% closed to 13,154.43. ASX 200 index in Australia increased 30.70 or 0.88% closed to 3,526.20. The KL Composite index in Malaysia higher 3.53 or 0.40% closed to 883.16. Markets of China were closed today.

The Kospi Index in South Korea increased 8.58 or 0.74% to close at 1,166.56. SET index in Thailand closed lower 13.35 or 2.98% to 435.00 and JSE Index in Indonesia increased 3.20 or 0.24% closed to 1,324.65. The Sensex index in India decreased 21.19 or 0.23% closed to 9,236.28.

Europe Markets Review

In London FTSE 100 Index closed lower 105.09 or 2.45% to 4,190.11, in Paris CAC 40 Index decreased 66.26 or 2.15% to close at 3,009.75 and in Frankfurt DAX index lower 90.61 or 2.01% to close at 4,428.11. In Zurich trading SMI decreased 145.03 or 2.68% to close at 5,272.90.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.85% and on 30-year bonds increased to 3.58%.

The U.S. dollar rose to $1.2954 to a euro and against the Japanese yen dropped to 89.98 yen.

Immediate futures prices of Texas crude oil increased to $0.62 to $41.54 a barrel, for natural gas increase 16 cent to $4.58 per mbtu and gasoline prices increased 5.00 cents to 123.35 cents a gallon.

Futures of corn decreased 2.75 cent to $3.8175, soybean declined 12.00 cents to $9.70, sugar decreased 0.28 cents to 12.59 a pound and wheat decreased 17.25 cent to $5.26 a bushel.

In metals trading, copper prices fell 3.75 cents to $1.4585 a pound, gold increased $19.80 to $908.00 per ounce and silver increased 36 cents to $12.32.