U.S. Stocks Gain 3%, Weak Job Report

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

U.S. benchmark indexes gained more than 3% on top of a rise of 1.5% yesterday. The stocks in the face of a gloomy jobless claims report and a rise in unemployment rate above 7.5%. Manufacturing indexes in Germany and UK declined. Toyota reported weaker than expected sales. Stocks in China surge.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks gained in the face of weak job report and ahead of the U.S. Senate vote on economic stimulus plan. Banks surged. Hartford Financial Services plunged on second quarterly loss in a row. [/R]

U.S. benchmark indexes gained more than 3% on top of a rise of 1.5% yesterday. The stocks in the face of a gloomy jobless claims report and a rise in unemployment rate above 7.5%. The job report showed no signs of easing in layoffs and unemployment may reach above 8.5% by this summer.

Stocks advanced ahead of the U.S. Senate vote and the weak job report only added to the urgency of passing a larger stimulus plan. Investors are hoping that larger government involvement in the economy will forestall the widening recession but are overlooking the possibility of sharp rise in inflation in the years to come.

Bank of America surged more than 30% after its CEO said that company has adequate capital and is not in immediate need of funds from the government. The bank’s stock has been under pressure since it overpaid for the acquisition of Merrill Lynch.

Banks and financial stocks led the gainers on the hopes that the U.S. Treasury plan will provide additional capital to the industry. Hartford plunges on second quarterly loss in a row.

Stocks in Europe recover tracking gains in New York. US unemployment surges on a record job losses. BMW gains but Volkswagen tumbles. In Paris trading, LVMH surges 13% on better than expected earnings.

UK manufacturing index declined 2.2% in December from November and fell 5.1% in the quarter ending in the month from the previous quarter. The Bank of England established the £50 billion facility to acquire debts from UK corporations and banks to provide more liquidity.

Toyota Motor Corp. revenues fall 28.4% to 4.8 trillion yen in the third quarter. Sharp Corp reversed its earlier projection of income to a loss for the current year. Sharp now estimates a loss of 100 billion yen from a profit of 60 billion yen projected earlier.

Stocks in Hong Kong and in Shanghai rose sharply on the hopes that Beijing will release more funds and provide fiscal stimulus to support the economy. However, Hong Kong finance chief sounded warning alarms as banks reported weak earnings in the latest quarter.

The stocks in Mumbai rise on the hopes that the soon to be announced interim budget will offer industry incentives and tax relief. The benchmark index Sensex gained 2.3%. The Reserve Bank of India offered easier access to loans to exporters.

Reserve Bank of Australia lowers its annual economic growth forecast from 1.5% to 0.25% in the current fiscal year. The RBA continues lag with the global market development and forecasted growth in the economy when global economy is sharply decelerating. ANZ warns that first half profit drop of 15%.

American Markets Reviews

Dow Jones Industrial Average increased 217.52 or 2.7% to a close of 8,280.59, S&P 500 gained 22.74 or 2.7% to 868.59, and Nasdaq Composite Index added 45.47 or 2.94% to a close of 1,591.71. In Toronto TSX Composite added 159.26 or 1.8% to close at 9,020.24.

In Latin American trading Brazil Bovespa Index increased 4% or 1,646.85 to 42,755.50 and Mexico Bolsa Index edged higher 2.9% or 566.43 to 20,303.39.

Argentina rose 4%, Chile added 1.7%, Peru decreased 0.2% and Colombia edged higher 1.6%. Venezuela gained 0.4%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 432 increased, 65 declined and 3 were unchanged.

Hartford Financial Services led the decliners in the S&P 500 index with a loss of 28% followed by losses in Apartment Investment with a loss of 9%, in Verisign Inc of 7.4%, in Salesforce.com of 7.3%, in Lincoln National Corp of 6.3%.

Fifth Third Bancorp led gainers in the S&P 500 index with a rise of 35% followed by gains in Regions Financial of 31.6%, in Huntington Bancorp of 31%, in Marshall & Ilsley of 30% and Bank of America of 23%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 126.97 or 1.60% to 8,076.62, Hang Seng index in Hong Kong increased 476.14 or 3.61% closed to 13,655.04, CSI 300 index in China higher 86.31 or 4.01% closed to 2,237.28. ASX 200 index in Australia increased 41.30 or 1.20% closed to 3,469.90. The KL Composite index in Malaysia higher 16.69 or 1.90% closed to 896.64.

The Kospi Index in South Korea increased 32.38 or 2.75% to close at 1,210.26. SET index in Thailand closed higher 10.95 or 2.53% to 444.39 and JSE Index in Indonesia increased 22.57 or 1.70% closed to 1,350.64. The Sensex index in India increased 209.98 or 2.31% closed to 9,300.86.

Europe Markets Review

In London FTSE 100 Index closed higher 62.94 or 1.49% to 4,291.87, in Paris CAC 40 Index increased 56.50 or 1.84% to close at 3,122.79 and in Frankfurt DAX index higher 134.14 or 2.97% to close at 4,644.63. In Zurich trading SMI increased 16.24 or 0.32% to close at 5,123.09.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.98% and on 30-year bonds advanced to 3.69%.

The U.S. dollar dropped to $1.2940 to a euro and against the Japanese yen inched higher to 92.06 yen.

Immediate futures prices of Texas crude oil decreased $0.98 to $40.19 a barrel, for natural gas increased $0.13 cent to $4.77 per mbtu and gasoline prices decreased 2.93 cents to 124.55 cents a gallon.

Futures of corn increased 6.00 cent to $3.77, soybean increased 21.00 cents to $10.01, sugar increased 14 cents to 13.12 a pound and wheat decreased 4.75 cent to $5.57 a bushel.

In metals trading, copper prices rose 12 cents to $1.62 a pound, gold decreased $1.70 to $912.50 per ounce and silver increased 32 cents to $13.07.