GDP Shrinks at 6.2%, GE Cuts Dividend

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

U.S. stocks closed lower after a sharp revision in the fourth quarter estimate of GDP shrink to 6.2%. General Electric cut 68% its dividend and save $9 billion. Citigroup agreed to let the U.S. increase its stake in the bank to 36% after it converted $25 billion in preferred stock to common stock.

[R]5:00PM New York – 11:00PM Frankfurt, 4:00AM Sydney – U.S. stocks closed lower after a sharp revision in the fourth quarter estimate of GDP shrink to 6.2%. General Electric cut 68% its dividend and save $9 billion. Citigroup agreed to let the U.S. increase its stake in the bank to 36% after it converted $25 billion in preferred stock to common stock.[/R]

U.S. revised its fourth quarter GDP shrink estimate to 6.2% from the previous estimate of the decline of 3.8%. For the year economy expanded at 1.1%. The sharp revision will certainly revise lower the estimate of the decline in the first quarter of this year to 4.5%.

Citigroup plunged nearly 40% after the Treasury agreed to convert its preferred stock of $25 billion to common stock and raised its stake in the company to 36%. Citigroup in the most active trading on New York Stock Exchange traded 1.8 billion shares and closed at $1.50. Citigroup received another $25 billion in credit.

General Electric lowered its quarterly dividend to 10 cents from 31 cents a share beginning third quarter of this year. The move will help the company save $9 billion and help preserve the company its investment grade credit rating. General Electric ((GE)) dropped 59 cents to $8.51.

Bank nationalization fears drag European shares down. Deutsche Telekom gains on better than expected earnings. Germany inflation unexpectedly climbed in February weighing the sentiment in trading in markets in Germany, France and Switzerland.

The Interpublic Group led gainers in the S&P 500 index with a rise of 3.0%. The Gap, Inc post lower profits. MoneyGram International, Inc turns a fourth quarter profit. Warner Chilcott Limited swings to loss in fourth quarter. Banks fell after Treasury converted its preferred share to common stocks.

Industrial production in Japan drops 10% in January. The sharp decline in production was led by the slowdown in machinery, automobiles and other industrial products manufacturing. The production plunged 31% from a year ago. Japan Lower House of parliament passed 88.5 trillion yen budget.

Agricultural Bank of China plans to issue Rmb350 billion bonds in 2009. In Shanghai trading stocks fell for the third day in a row and closed down more than 7% for the week. Investors are increasingly revising their economic expectations outlook downward as global economic crisis deepens.

India foreign exchange reserves falls $165 million in the week ending February 20. India’s economic growth eases to 5.3% in the third quarter to December. Weaker rupee has prompted foreign funds to net withdraw 6,431.90 crore rupees in the year so far.

Australian stocks ended flat on disappointing earnings at both Woolworths and OZ Minerals. Energy stocks helped trim losses as crude oil prices rose 6.4% to $45.2 per barrel. Woolworth reported sales rise of 9% and net income increase of 10%. OZ Minerals reported net loss.

American Markets Reviews

Dow Jones Industrial Average decreased 88.81 or 1.2% to a close of 7,182.08, S&P 500 Index declined 12.07 or 1.6% to 752.83, and Nasdaq Composite Index edged lower 33.96 or 2.4% to a close of 1,391.47. In Toronto TSX Composite gained 254.52 or 3.2% to close at 8,186.82.

In Latin American trading, Mexico Bolsa Index decreased 153.54 or 0.8% to 18,047.16 and Brazil Bovespa Stock Index dropped 0.1% or 51.40 to 38,180.18.

Argentina dropped 0.12%, Chile decreased 0.8%, Peru decreased 2.5% and Colombia added 1.7%.

U.S. Stock Movers

Of the stocks in S&P 500 index, 131 increased, 364 declined and 5 were unchanged.

SLM Corp led the decliners in the S&P 500 index with a loss of 30.9% followed by losses in Integrys Energy of 26.7%, in Humana Inc of 19.5%, in Developers Diversified of 17.3%, in Supervalu Inc of 16.2%.

Huntington Bancorp led gainers in the S&P 500 index with a surge of 19.2% followed by gains in Fifth Third Banc of 18.1%, in SunTrust Banks of 17.7%, in Aflac Inc of 17.7% and in U.S. Bancorp of 17%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 110.49 or 1.48% to 7,568.42, Hang Seng index in Hong Kong decreased 83.37 or 0.65% closed to 12,811.57, CSI 300 index in China lower 49.70 or 2.27% closed to 2,140.49. ASX 200 index in Australia decreased 1.00 or 0.03% closed to 3,344.50. The KL Composite index in Malaysia lower 2.75 or 0.31% closed to 890.67.

The Kospi Index in South Korea increased 8.24 or 0.78% to close at 1,063.03. SET index in Thailand closed lower 0.42 or 0.10% to 431.52 and JSE Index in Indonesia decreased 4.85 or 0.38% closed to 1,285.48. The Sensex index in India decreased 63.25 or 0.71% closed to 8,891.61.

Europe Markets Review

In London FTSE 100 Index closed lower 85.55 or 2.18% to 3,830.09, in Paris CAC 40 Index decreased 42.36 or 1.54% to close at 2,702.48 and in Frankfurt DAX index lower 98.88 or 2.51% to close at 3,843.74. In Zurich trading SMI decreased 80.11 or 1.68% to close at 4,690.67.

Commodities, Bonds and Currencies

Yields on 10-year bond increased to 2.99% and on 30-year bonds increased to 3.67%.

The U.S. dollar edged higher to $1.2728 to a euro and against the Japanese yen inched higher to 98.4060 yen.

Immediate futures prices of Texas crude oil increased $2.12 to $44.62 a barrel, for natural gas increased $0.06 cent to $4.09 per mbtu and gasoline prices increased 12.53 cents to 129.20 cents a gallon.

Futures of corn decreased 1.75 cent to $3.7050, soybean decreased 11.50 cents to $8.6850, sugar gained to 0.48 a pound to 13.90 and wheat decreased 10.75 cents to $5.25 a bushel.

In metals trading, copper prices increased 3.50 cents to $1.57 a pound, gold decreased $19.00 to $947.20 per ounce and silver decreased 0.82 cent to $13.09.