Fourth Quarter GDP Shrinks, Stocks Fall

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

The fourth quarter GDP declined at an annual rate of 3.8% on weak consumer spending, residential investments and weak exports. Stocks in the early morning dropped on weak economic data. Amazon.com fourth quarter sales increased 18% and net rose 9%.

[R]10:45AM New York – U.S. stocks declined after the release of fourth quarter GDP growth rate. Amazon.com surged after latest quarterly net rose 9%.[/R]

The U.S. economic rate declined at 3.8% in the fourth quarter. The decline would have been steeper at 5.1% if manufacturers had not increased inventories. The weak consumer spending, fall in exports and a drop in fixed investment contributed to the weakness in the economy.

Real federal government consumption expenditures and gross investment increased 5.8% in the fourth quarter, compared with an increase of 13.8% in the third. National defense increased 2.1%, compared with an increase of 18.0%.

The largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports.

Stock Movers

Stocks in the early morning dropped on weak economic data. S&P 500 index declined 0.75% or 6.30 to 838.84. Of the stocks in the index, 130 rose, 364 declined and 6 were unchanged.

Monster Worldwide led the decliners in the S&P index with a loss of 14% followed by losses in Juniper Networks of 13.7%, in PerkinElmer Inc of 12.5%, in International Paper Company of 11% and U.S. Steel Corp.

Amazon.com Inc led the gainers in the S&P 500 index with a rise of 18% followed by gains in KLA-Tencor Corp of 8.4%, in Flowserve Corp 7.1%, in MasterCard Inc of 5.7%.

Amazon.com Net Rises 9%, Chubb Net Drop 37%

Amazon.com, Inc, the Internet based retailer said fourth quarter revenues rose 18% to $6.7 billion from $5.67 billion a year ago. Net income in the quarter rose 9% to $225 million or 52 cents per diluted share compared to net income of $207 million or 48 cents per share a year ago.

Total revenues for the fiscal year 2008 rose 30% to $19.2 billion from $14.8 billion a year ago. Net income for the year rose 35% to $645 million or $1.49 per diluted share compared to net income of $476 million or $1.12 per share a year ago.

The Chubb Corporation, insurance company said fourth quarter underwriting income fell 8% to $443 million from $480 million a year ago. Net income in the quarter fell 37% to $407 million or $1.13 per diluted share compared to net income of $650 million or $1.68 per share a year ago.

Underwriting Income for the fiscal year 2008 fell 33% to $1.4 billion from $2.1 billion a year ago. Net income for the year fell 36% to $1.8 billion or $4.92 per diluted share compared to net income of $2.81 billion or $7.01 per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 257.19 or 3.12% to 7,994.05, Hang Seng index in Hong Kong increased 123.78 or 0.94% closed to 13,278.21. ASX 200 index in Australia increased 14.50 or 0.41% closed to 3,540.70. The KL Composite index in Malaysia higher 1.29 or 0.15% closed to 884.45. Markets of China were closed today.

The Kospi Index in South Korea decreased 4.45 or 0.38% to close at 1,162.11. SET index in Thailand closed higher 2.69 or 0.62% to 437.69 and JSE Index in Indonesia increased 8.02 or 0.61% closed to 1,332.67. The Sensex index in India increased 187.96 or 2.04% closed to 9,424.24.

Europe Markets Review

In London FTSE 100 Index traded lower 0.61 or 0.01% to 4,189.50, in Paris CAC 40 Index decreased 10.22 or 0.34% to 2,999.53 and in Frankfurt DAX index traded lower 17.26 or 0.39% to 4,410.85. In Zurich trading SMI decreased 6.70 or 0.13% to 5,266.20.