U.S. Stocks Fall, Sun Micro Surges

123jump.com Staff
18 Mar, 2009
New York City

U.S. stocks traded lower ahead of interest rate decision from the Fed. The restaurant stocks edged higher after better than expected earnings from Darden Restaurants. Coca-Cola bid to purchase the largest juice company in China was rejected. Sun Microsystems surged on IBM bid.

[R]11:10AM New York – U.S. stocks declined ahead Fed rate decision. General Mills declined after it offered lower than expected annual profit estimate. Darden Restaurant earnings lifted stocks in the sector.[/R]

U.S. stocks fell in the morning trading ahead of rate decision by the Fed.

Of the stocks in S&P 500 index, 93 gained, 403 increased and 4 were unchanged. General Mills led the decliners in the index with a loss of 9% followed by losses in Lincoln National Corp of 7.3%, in Capital One Financial of 6.5%, in Jacobs Engineering of 6.4% and in DR Horton of 6.3%.

Sun Microsystems surged 66% and led the gainers in the S&P 500 index stocks followed by gains in AIG of 25%, in E*Trade Financial of 19%, in Darden Restaurant of 15% and in Citigroup of 11%.

Wall Street Journal report suggested that IBM in discussion to acquire Sun Micro and boost its presence in network server market. 123jump.com contacted investors relations staff at both companies to verify the report but both companies denied to confirm the report. The deal will help IBM to increase server offering to customers and integrate several middleware and other software applications to its largest clients.

Coca-Cola Abandons China Purchase

Coca- Cola Company abandoned its takeover of China based fruits and vegetables juice maker, Huiyuan Juice Group Ltd. Chinese regulators rejected the $2.4 billion takeover after citing Coca-Cola’s dominant market position in China and its ability to restrict local competition and raise prices for consumers.

The decision was a surprise to investors and several trade watchers. The deal was accepted to be approved before the end of the month. In Hong Kong trading shares of Huiyuan shares fell 22% and traded as low as 33% below the Coca-Cola offer price.

Coca-Cola dominates the carbonated beverage market in China with the largest market share of 51% followed by 31% share of Pepsi according to industry researcher Euromonitor International and noted on Bloomberg news.

Measured Inflation Index Rises

The consumer price index increased 0.4% in February from January and rose 0.2% from a year ago month. The measure of inflation is widely watched by investors to understand the underlying inflation in the economy. The measured inflation shows subdued inflation but most people feel higher inflation as the basket of purchase varies widely between families.

The core rate of inflation, that excludes food and energy costs, rose 0.2%, second monthly increase in a row, is still within the Fed target rate of inflation. The Fed chairman in his recent statements indicated that near term outlook for inflation is weak but Fed is prepared to withdraw monetary stimulus with the first sign of inflation.

However, the current Fed policies are highly inflationary and are likely to saddle the U.S. with higher inflation for years. The measured inflation fails to capture the inflation that most families feel on their budgets and also understates the underlying inflation in the economy.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 23.04 or 0.29% to 7,972.17, Hang Seng index in Hong Kong increased 239.08 or 1.86% closed to 13,117.17, CSI 300 index in China higher 10.25 or 0.44% closed to 2,332.65. ASX 200 index in Australia decreased 5.60 or 0.16% closed to 3,446.30. The KL Composite index in Malaysia higher 6.09 or 0.72% closed to 847.96.

The Kospi Index in South Korea increased 6.07 or 0.52% to close at 1,169.95. SET index in Thailand closed higher 3.88 or 0.92% to 426.20 and JSE Index in Indonesia increased 10.74 or 0.82% closed to 1,322.84. The Sensex index in India increased 112.86 or 1.27% closed to 8,976.68.

Europe Markets Review

In London FTSE 100 Index traded lower 1.93 or 0.05% to 3,855.17, in Paris CAC 40 Index increased 19.52 or 0.71% to 2,786.80 and in Frankfurt DAX index traded higher 42.63 or 1.07% to 4,030.40. In Zurich trading SMI increased 25.18 or 0.52% to 4,838.96.