U.S. Stocks Rebound, Volatile Banks

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

U.S. benchmark indexes reversed their earlier losses of more than 1.5% and closed up between 1.5% and 2%. The sharp reversal came after the release of earnings from MasterCard Inc and expectations that the regional banks will soon be provided assurances of loss sharing by the Treasury.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks closed higher but not before dropping as much as 1.5%. Initial claims of unemployment surged to a record high in 26 years.[/R]

U.S. benchmark indexes reversed their earlier losses of more than 1.5% and closed up between 1.5% and 2%. The sharp reversal came after the release of earnings from MasterCard Inc and expectations that the regional banks will soon be provided assurances of loss sharing by the Treasury.

Initial claims of weekly unemployment rose to a record 626,000 at the end of last week. The companies across the nation continue to lay people off and more job losses are expected in the coming weeks.

MasterCard Inc reported better than expected profit and earlier Visa reported better results on higher overseas spending.

Bank stocks remained weak in trading but closed higher after the speculation that U.S. Treasury will announce a plan to share mortgage loan losses with the regional and large banks.. Fifth Third, Huntington, Regions Financial were active. Bank of America fell further as the expectations of the bank nationalization gathered momentum but managed to close higher.

Akamai Technologies surged on better than expected results.

European markets closed lower on weak profits from banks and weaker economic conditions. The European Central Bank left its key lending rate unchanged at 2% and the Bank of England lowered its rate by 50 basis points to 1%. Deutsche Bank, Swiss Re, Zurich Financial and Unilever plunged.

The Bank of England cut its key lending rate by 0.5% to 1% as the UK economy shows no sign of stabilizing. The latest move comes on the expectation of inflation falling below 2%. Home prices in January declined 17% from a year ago but gained 1.9% from December.

January new car sales in Japan drop 28% on weak consumer demand and tight lending. Sales of Toyota fell 23.4%, at Nissan and Honda declined 31%. Mini-cars sales which are more than 70% of total sales declined 5.6%. Casio lowered its earnings estimate by 90%. NTT nine months sales edged 1.4%.

China offered tax rebate to textile and equipment industries. China in the last three months has offered similar subsidies to home buyers, banks and small businesses. The latest move is part of the broader attempt by China to sustain the latest economic expansion in the face of exports.

Stocks in Mumbai fell 1.2% after foreign investors continue to withdraw from the capital markets. For the year so far, foreign investors have sold nearly 4,500 crore rupees of shares. The latest measure of inflation in India showed a decline to 5.07%. Inflation is expected to dip to below 2%.

Stocks in Australia fell as companies offer cautious views on earnings. Macquarie Group cuts its annual earnings by half on A$900 million write-off. New Zealand unemployment rate advanced to 4.6% at the end of the December quarter. Qantas Airways dropped to 12-year low on A$500 million offering.

American Markets Reviews

Dow Jones Industrial Average increased 106.41 or 1.4% to a close of 8,063.07, S&P 500 gained 13.62 or 1.6% to 845.85, and Nasdaq Composite Index added 31.19 or 2.06% to a close of 1,546.24. In Toronto TSX Composite added 167.89 or 1.9% to close at 8,860.98.

In Latin American trading Brazil Bovespa Index increased 2.5% or 979.61 to 41,018.65 and Mexico Bolsa Index edged higher 0.58% or 114.36 to 19,736.96.

Argentina rose 2.9%, Chile added 1.4%, Peru decreased 0.2% and Colombia edged higher 0.7%. Venezuela edged lower 1.7%.

U.S. Stock Movers

U.S. stocks edged higher with the S&P 500 index gained 2.03% to 849.14. Of the stocks in S&P 500 index, 424 increased, 75 declined and 1 was unchanged.

Akamai led gainers in the index with a rise of 18% followed increases in Abercrombie & Fitch with a rise of 11%, in Aflac Inc of 11.6% and Fifth Third Bancorp of 9%.

Harman International led decliners in the S&P 500 index with a loss of 13% followed by losses in Sunoco of 7%, in Sprint Nextel and Textron of 4%, in General Electric, Hewlett Packard and HJ Heinz of 2%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 89.29 or 1.11% to 7,949.65, Hang Seng index in Hong Kong increased 115.01 or 0.88% closed to 13,178.90, CSI 300 index in China lower 15.44 or 0.71% closed to 2,150.97. ASX 200 index in Australia decreased 9.30 or 0.27% closed to 3,428.60. The KL Composite index in Malaysia higher 3.15 or 0.36% closed to 879.95.

The Kospi Index in South Korea decreased 17.49 or 1.46% to close at 1,177.88. SET index in Thailand closed higher 0.40 or 0.09% to 433.44 and JSE Index in Indonesia increased 7.71 or 0.58% closed to 1,328.08. The Sensex index in India decreased 110.97 or 1.21% closed to 9,090.88.

Europe Markets Review

In London FTSE 100 Index closed higher 0.33 or 0.01% to 4,228.93, in Paris CAC 40 Index decreased 2.70 or 0.09% to close at 3,066.29 and in Frankfurt DAX index higher 17.70 or 0.39% to close at 4,510.49. In Zurich trading SMI decreased 118.61 or 2.27% to close at 5,106.85.

Commodities, Bonds and Currencies

Yields on 10-year bond decreased to 2.90% and on 30-year bonds declined to 3.63%.

The U.S. dollar gained to $1.2814 to a euro and against the Japanese yen inched higher to 91.28 yen.

Immediate futures prices of Texas crude oil increased $0.59 to $40.91 a barrel, for natural gas increased $0.061 cent to $4.5658 per mbtu and gasoline prices increased 4.38 cents to 126.22 cents a gallon.

Futures of corn decreased 13.00 cent to $3.71, soybean increased 30.50 cents to $9.80, sugar increased 0.39 cents to 12.98 a pound and wheat increased 19.50 cent to $5.61 a bushel.

In metals trading, copper prices rose 1.60 cents to $1.515 a pound, gold increased $14.50 to $916.70 per ounce and silver increased 40 cents to $12.87.