U.S. Financials Plunge On Weak Bailout Plan

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

U.S. stocks dropped after Treasury Secretary disappointed investors with sketchy plan for bank bailout. He also proposed to release $2 trillion to banks under tighter conditions but did not say how he will fund the plan. Financials dropped sharply.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney –U.S. stocks dropped after Treasury Secretary disappointed investors with sketchy plan for bank bailout. He also proposed to release $2 trillion to banks under tighter conditions. Financials dropped sharply.[/R]

U.S. stocks dropped sharply after Treasury Secretary Timothy Geithner offered few concrete details of the bank bailout plans and proposed to spend as much as $2 trillion without explaining where the money will be raised from.

The U.S. is in the danger of flooding the world market with excess dollars and may spark a sizable global inflation not seen in the last three decades.

Financials dropped sharply after investors were disappointed with the Treasury Secretary plan. Principal Financial plunged 30% and Bank of America and Citigroup dropped 15%.
Principal Financial dropped after it reported quarterly loss and said that it may need to access capital. Lincoln National Corp dropped 20% after it reported first quarterly loss in more than five years.

Brooks Automation plunges on first quarter loss. Expeditors International, IntercontinentalExchange and Molson Coors Brewing Company surge. General Motors Corporation cuts 10,000 salaried jobs.

European Stocks decline for the second day on the worries that the U.S. economic stimulus may not be enough and bank bailout efforts may fall short of expectations. UBS posts record 13 billion euro loss and cuts additional staff. After the close, U.S. indexes dropped more than 4%.

Stocks in Tokyo edged lower after consumer confidence dropped the most in 26 years and bad loans in the six months to September rose sharply. The loan quality at nine largest banks deteriorated as exports slow and manufacturing and construction struggles.

Consumer price index in China eased 1% in January from the same period a year ago and increased 0.9% from December. China Southern Airlines fell 1.5% to HK$1.36 after saying it plans to issue Rmb2.3 billion worth of A shares at Rmb3.16 per share and $148 million worth of H shares at Rmb1 per share.

The budget deficit in India forecasted to widen 6% in fiscal 2009 according to investment banker Kotak Mahindra Bank. India Tea Production Rises 4% to 981 million kilos in 2008. DLF jumped 8.4% to 151.60 rupees on news the company has secured long-term loans of about 2,000 crore rupees.

Australian market averages fell after a report from National Australia Bank showed business confidence declined to a record in January. Investor sentiment was further weakened after AWB cautioned its first half profit may drop 55% in the first half.


American Markets Reviews

Dow Jones Industrial Average plunged 381.99 or 4.6% to a close of 7,888.88, S&P 500 dropped 42.73 or 4.91% to 827.17, and Nasdaq Composite Index slid 66.83 or 4.20% to a close of 1,524.73. In Toronto TSX Composite lost 229.39 or 2.54% to close at 8,817.89.

In Latin American trading Brazil Bovespa Index decreased 2.1% or 892.69 to 41,207.43 and Mexico Bolsa Index dropped 3.5% or 711.38 to 19,825.72.

Argentina rose 2.7%, Chile added 2.3%, Peru decreased 1.7% and Colombia edged higher 0.3%. Venezuela gained 1.3%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 9 increased, 491 declined and none were unchanged.

Regions Financial led the decliners in the S&P 500 index with a loss of 30.2% followed by losses in Principal Financial with a loss of 29.60%, in Sun Trust Banks of 27.2%, in KeyCorp of 26.6%, in Marshall Ilsley of 26%. Huntington Banc dropped 24.9% and Fifth Third Banc declined 24.2%.

Expeditors International led gainers in the S&P 500 index with a rise of 6% followed by gains in Davita Inc of 3.2%, in Qwest Communication of 2.4%, in Rohm & Haas of 1.4% and King Pharmaceuticals of 1%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 23.09 or 0.29% to 7,945.94, Hang Seng index in Hong Kong increased 111.58 or 0.81% closed to 13,880.64, CSI 300 index in China higher 30.08 or 1.31% closed to 2,326.76. ASX 200 index in Australia decreased 19.90 or 0.57% closed to 3,488.70. The KL Composite index in Malaysia higher 6.88 or 0.77% closed to 903.52.

The Kospi Index in South Korea decreased 3.82 or 0.32% to close at 1,198.87. SET index in Thailand closed lower 1.22 or 0.27% to 443.17 and JSE Index in Indonesia decreased 10.10 or 0.75% closed to 1,332.13. The Sensex index in India increased 63.58 or 0.66% closed to 9,647.47.

Europe Markets Review

In London FTSE 100 Index closed lower 94.53 or 2.19% to 4,213.08, in Paris CAC 40 Index decreased 114.12 or 3.64% to close at 3,020.75 and in Frankfurt DAX index lower 161.28 or 3.46% to close at 4,505.54. In Zurich trading SMI decreased 13.81 or 0.27% to close at 5,144.69.

Commodities, Bonds and Currencies

Yields on 10-year bond decreased to 2.81% and on 30-year bonds dropped to 3.49%.

The U.S. dollar edged lower to $1.2908 to a euro and against the Japanese yen inched lower to 90.44 yen.

Immediate futures prices of Texas crude oil decreased $2.01 to $37.55 a barrel, for natural gas decreased $0.26 cent to $4.54 per mbtu and gasoline prices increased 2.61 cents to 127.00 cents a gallon.

Futures of corn increased 0.75 cent to $3.76, soybean decreased 8.00 cents to $9.94, sugar decreased 6 cents to 13.50 a pound and wheat decreased 9.00 cent to $5.56 a bushel.

In metals trading, copper prices fell 2.10 cents to $1.555 a pound, gold increased $0.10 to $914.30 per ounce and silver decreased 5 cents to $13.08.