Weak Profits, Weaker GDP;S&P Falls 8.6%

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

The preliminary read on the fourth quarter U.S. GDP suggested a decline in real and nominal terms. The twin decline, a first in fifty years may indicate a weakness in corporate profits in the fourth quarter. Industrial production in Japan fell sharply and exports from Hong Kong declined.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – The U.S. economy declined in nominal and real terms. Procter & Gamble fell on weak outlook. The benchmark index declined 8.6% in the month, steepest decline in eight decades.[/R]

The fourth quarter U.S. 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%.

The economy declined in nominal terms, unadjusted for inflation at annual rate of 4.1%.

U.S. stocks edged lower on weak economic growth report. Amazon.com increased on higher sales and earnings. Monster Worldwide declined on 37% decline in earnings. Chevron and ExxonMobil gained after reporting better than expected earnings.

Japan industrial production index in December dropped 9.6%. The sharp decline in production was driven by falling demand in transport and industrial machinery orders and falling global exports. The total number of unemployed rose 17% in December. The Nikkei 225 index fell 3.1%.

Hong Kong exports in December fell more than 11% and for the year declined 5%. Exports declined 15% to the U.S. and dropped 12% to china. Chine imported 51% of its crude oil needs in 2008. Stocks in Hong Kong trading rose on a surge in shipping companies.

Stocks in Australia gained on a rise in gold price. Despite a decline in interest rate and significant increase in lending availability from the Reserve Bank of Australia, the lending fell 0.3% in December. Separately, Rio Tinto sold its iron ore mine and potash assets for $1.6 billion.

American Markets Reviews

Dow Jones Industrial Average decreased 148.15 or 1.80% to a close of 8,000.86, S&P 500 decreased 19.26 or 2.3% to 825.88, and Nasdaq Composite Index decreased 31.42 or 2.1% to a close of 1,476.42. In Toronto TSX Composite decreased 67.86 or 0.8% to close at 8,694.90.

In Latin American trading Brazil Bovespa Index decreased 0.85% or 337.63 to 39,300.79 and Mexico Bolsa Index edged lower 0.2% or 28.09 to 19,565.14.

Argentina fell 1.1%, Chile declined 0.6%, Peru decreased 0.9% and Colombia edged higher 1.2%. Venezuela edged lower 0.3%.

U.S. Stock Movers

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%.

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 closed lower 40.47 or 0.97% to 4,149.64, in Paris CAC 40 Index decreased 35.83 or 1.19% to close at 2,973.92 and in Frankfurt DAX index lower 89.76 or 2.03% to close at 4,338.35. In Zurich trading SMI increased 17.15 or 0.33% to close at 5,290.05.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.85% and on 30-year bonds increased to 3.60%.

The U.S. dollar rose to $1.2806 to a euro and against the Japanese yen dropped to 89.86 yen.

Immediate futures prices of Texas crude oil increased to $0.11 to $41.55 a barrel, for natural gas decreased 18 cent to $4.39 per mbtu and gasoline prices increased 2.91 cents to 126.00 cents a gallon.

Futures of corn decreased 2.75 cent to $3.79, soybean increased 9.50 cents to $9.80, sugar decreased 0.08 cents to 12.67 a pound and wheat decreased 10.00 cent to $5.68 a bushel.

In metals trading, copper prices fell 1.40 cents to $1.4435 a pound, gold increased $24.70 to $929.80 per ounce and silver increased 50 cents to $12.65.