Resource Stocks Rise, BoA Drops

123jump.com Staff
04 Feb, 2009
New York City

U.S. stocks dropped on weak earnings and worries that financial system is still under duress. The Bank of America fell as market speculated that CEO Lewis may be replaced. A rise in commodities prices lifted miners in Europe, UK and in New York trading.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks dropped on weak earnings and worries that financial system is still under duress. The Bank of America fell as market speculated that CEO Lewis may be replaced.[/R]

U.S. stocks could not shake off its periodic worries about the health of the banking system and new worries about Bank of America brought benchmark indexes to a decline at close. Weak earnings from Disney, Kraft and Costco Wholesale Corp. The new pronouncement from the President Obama capped the salaries of CEOs at companies that received bailout under the TARP program at $500,000 may have played a role in Goldman Sachs offering to repay the borrowed money.

Bank of America stock remains under cloud as people speculate how long the current CEO Ken Lewis will remain in the office.

The Baltic Dry Index surged after the demand for iron ore remained above the expected level. The measure of bulk ocean freight rate has surged nearly 70% so far in the year but had fallen more than 90% last year.

Textron led the decliners after it was forced to tap in the credit line to boost its liquidity and repay its commercial paper debt. CB Richard Ellis and Jones Lang LaSalle surged after it exceeded the earnings expectations.

European stocks advance on a rise in commodities. Euro tumbles against dollar and yen on weak retail sales. Eurostat reported December retail sales declined 1.6% compared to a year ago and revised November sales were lowered. Roche fell on weak earnings.

Stocks in London rallied on a rise in commodities prices. A private estimate lifted its estimate of the shrink in the economy to 2.7% from 0.9% in the earlier estimate in November. A manufacturing index in January showed a decline but at a slower pace.

Tokyo stocks charged ahead on the hopes that recent market share gains by the automakers in the U.S. will sustain exports. Panasonic third quarter operating profit declined 84% and sales dropped 20%. The company estimated loss of $4.2 billion and plans to cut 15,000 jobs.

Manufacturing activities in China contract but at a slower pace in January. Steel and base metal makers traded higher on a rise in commodities prices. Commercial property builders in Hong Kong dropped for the second day in a row on rising negative equity mortgages and continued fall in property price.

A rally in stocks in India came to a halt after the tax department estimated a shortfall of 12.5% in collection in the first eleven months of current fiscal year. However, the government maintained that the collection will meet its target.

Stocks in Australia fell 2% on weak new building approvals and despite retail sales increase. Building approvals fell in December as construction industry suffers its one of the worst declines in a decade. December retail sales rose 3.8%. BHP Billiton first half profit declined 57%.

American Markets Reviews

Dow Jones Industrial Average decreased 121.70 or 1.5% to a close of 7,956.66, S&P 500 declined 6.28 or 0.75% to 832.23, and Nasdaq Composite Index decreased 1.25 or 0.08% to a close of 1,515.05. In Toronto TSX Composite added 64.46 or 0.75% to close at 8,693.09.

In Latin American trading Brazil Bovespa Index increased 0.96% or 382.28 to 40,129.04 and Mexico Bolsa Index edged lower 0.04% or 7.86 to 19,622.60.

Argentina rose 0.6%, Chile added 0.4%, Peru increased 1.8% and Colombia edged higher 1.2%. Venezuela edged higher 0.20%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 223 increased, 276 declined and 1 was unchanged.

Textron Inc led decliners in the S&P 500 index with a fall of 18.4% followed by losses in Huntington Bancorp of 17.8%, in SLM Corp of 12.4%, in Massey Energy Company of 11.5%, in Ryder Systems Inc of 10.8%, in Bank of America of 10% and in Kraft Foods Inc of 9.3%.

CB Richard Ellis led gainers in the S&P 500 index with a rise of 13% followed by increases in Freeport McMoran of 9.7%, in Electronic Arts of 9.7%, in Nisource Inc of 7.5%, in AK Steel Holdings of 7%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 213.43 or 2.73% to 8,038.94, Hang Seng index in Hong Kong increased 287.00 or 2.25% closed to 13,063.89, CSI 300 index in China higher 57.50 or 2.73% closed to 2,166.41. ASX 200 index in Australia decreased 70.80 or 2.02% closed to 3,437.90. The KL Composite index in Malaysia lower 2.87 or 0.33% closed to 876.80.

The Kospi Index in South Korea increased 32.17 or 2.77% to close at 1,195.37. SET index in Thailand closed higher 2.35 or 0.55% to 433.04 and JSE Index in Indonesia increased 16.03 or 1.23% closed to 1,320.36. The Sensex index in India increased 52.55 or 0.57% closed to 9,201.85.

Europe Markets Review

In London FTSE 100 Index closed higher 64.14 or 1.54% to 4,228.60, in Paris CAC 40 Index increased 86.60 or 2.90% to close at 3,068.99 and in Frankfurt DAX index higher 117.83 or 2.69% to close at 4,492.79. In Zurich trading SMI increased 7.85 or 0.15% to close at 5,225.46.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.94% and on 30-year bonds were unchanged to 3.68%.

The U.S. dollar gained to $1.2832 to a euro and against the Japanese yen dropped to 89.31 yen.

Immediate futures prices of Texas crude oil decreased $0.46 to $40.32 a barrel, for natural gas increased $0.084 cent to $4.597 per mbtu and gasoline prices increased 5.14 cents to 121.84 cents a gallon.

Futures of corn decreased 3.50 cent to $3.58, soybean increased 3.50 cents to $9.49, sugar decreased 0.07 cents to 12.59 a pound and wheat decreased 10.25 cent to $5.42 a bushel.

In metals trading, copper prices rose 0.90 cents to $1.5310 a pound, gold decreased $9.70 to $902.20 per ounce and silver increased 17 cents to $12.47.