GE Outlook Drags U.S. Stocks

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

U.S. stocks declined after General Electric offered weak earnings outlook in its financial division. Banks and financial services stocks fell with GE dropping as much as 7%. GE has plunged 73% in the last one year of trading. The CBO revised its estimate of U.S. budget deficit sharply higher.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– U.S. stocks declined after General Electric offered weak earnings outlook in its financial division. Stocks banks and financial services companies declined.[/R]

Global Markets

The nonpartisan U.S. Congressional office estimated $1.8 trillion in deficit for the current fiscal year, down from the previous estimate of $1.2 trillion. The office also doubled its projection for the deficit in fiscal 2010 to $1.4 trillion.

The CBO estimated gross domestic product to decline 1.5% in fiscal 2009 and surge to 4.1% in the years 2010 and 2011. The unemployment rate is expected to peak at 9.4% before the early part of 2010 and will hover above 7% till 2011.

In New York trading stocks closed lower after General Electric offered weak assessment of its financial arm. In a presentation to financial analysts the diversified conglomerate estimated earnings at GE capital for the year to match its previous estimate of $5 billion but can slide to $2.5 billion if the current economic conditions prevail for the year.

GE ((GE)) stocks closed down 5.8%, after dropping as much as 7%, to $9.54. General Electric stock has declined nearly 60% in the year so far and plunged 73% in the last one year of trading.

The GE news dragged banks and other financial stocks in today’s trading. Separately, Barclays offered to finance entire purchase price of its ETF unit.

MGM Mirage and Lincoln National drop on debt downgrades. AIG plunges on more investigations in bonus practices. Fluor Corp declines on project halt in Kuwait. AutoNation and Cabot Corp fall on ratings downgrade.

Gold and crude oil prices decline after surging in previous sessions. European industrial production declines in January at a faster pace than in December. Alibaba.com falls on earnings miss. Asian markets close generally lower on weak regional trading.

U.K. stocks closed higher for the second day in a row on a rise in insurance and mining stocks. Banks closed lower. Regus Group Plc surged 31% to 65.5 pence after the rental office services provider reported 2008 annual revenue rise of 25% and earnings gain of 11%.

Markets in Japan were closed.

Hong Kong GDP falls 2.5% in the fourth quarter. Stocks in Shanghai and Hong Kong closed lower after weaker than expected earnings from China Mobile and Alibaba.com Ltd. Hong Kong bankruptcies increase 120% in February. Ahead of bank earnings next weeks, investors sold financial stocks.

Foreign exchange reserve of India rises by $1.4 billion. RBI will unveil its credit policy on April 21. Retail inflation eases to 10.79% in February. In trading, telecom stocks fell on lower text message tariff and L&T declined after the settlement with Grasim on cross holdings.

Australia revised its jobless rate higher and economic growth rate lower. Jobless rate is expected to rise to 7% and economic growth is expected to drop to 0.75% in the current fiscal year. Separately, BHP slashes prices of coal for Japanese customers and other mining companies lower coal prices as well.

North American Markets

Dow Jones Industrial Average declined 122.42 or 1.7% to a close of 7,278.38, S&P 500 Index decreased 15.50 or 1.98% to 768.54, and Nasdaq Composite Index declined 26.21 or 1.8% to close at 1,457.27.

Of the stocks in S&P 500 index, 75 increased, 424 declined and one was unchanged.

AIG led the decliners in the S&P 500 index with a loss of 25.3% followed by losses in Xerox Corp with a loss of 18.3%, XL Capital Ltd of 14.5%, in Host Hotels & Real Estate of 13.5%, in Kimco Realty of 12.9% and in Vornado Realty Trust of 12.8%.

Dynegy Inc led gainers in the S&P 500 index with a rise of 14.5% followed by gains in General Motors of 10.8%, in Ford Motor Company of 9.6%, in Conagra Foods of 3.4% and in Johnson & Johnson of 3.2%.

South American Markets Indexes

Mexico Bolsa Index decreased 233.21 or 1.19% to 19,363.30. Brazil Bovespa Stock Index declined 377.02 or 0.93% to 40,076.41.

Argentina declined 1.2%, Chile decreased 0.5%, Peru fell 0.8% and Colombia decreased 0.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 25.92 or 0.68% to 3,842.85, in Paris CAC 40 Index increased 14.15 or 0.51% to close at 2,791.14 and in Frankfurt DAX index higher 25.28 or 0.63% to close at 4,068.74. In Zurich trading SMI decreased 7.46 or 0.16% to close at 4,787.17.

Asian Markets Review

The Hang Seng index in Hong Kong decreased 297.41 or 2.26% closed to 12,833.51, CSI 300 index in China lower 2.73 or 0.11% closed to 2,379.84. ASX 200 index in Australia decreased 14.40 or 0.41% closed to 3,465.80. The KL Composite index in Malaysia higher 4.64 or 0.54% closed to 856.82.The Markets in Japan were closed today.

The Kospi Index in South Korea increased 9.13 or 0.79% to close at 1,170.94. SET index in Thailand closed higher 1.92 or 0.45% to 429.64 and JSE Index in Indonesia increased 19.29 or 1.44% closed to 1,360.89. The Sensex index in India decreased 35.07 or 0.39% closed to 8,966.68.

Commodities, Metals, and Currencies

Crude oil increased 3 cents to close at $52.07 a barrel for a front month contract, natural gas increased 7 cents to $4.24 per mBtu and gasoline futures increased 1.90 cents to close at 138.31 cents per gallon.

Wheat futures closed down 5.0 cents in Chicago trading and closed at $5.5025 a bushel. Sugar decreased 0.08 cents in trading at 13.54 cents a pound. Soybean future closed up 11.50 cent to $9.52 a bushel.

Gold decreased $5.50 in New York trading to close at $953.30 per ounce, silver closed up $0.25 to $13.77 per ounce and copper for the front month delivery increased 0.20 cents to $1.8095 per pound.

Dollar edged lower against euro to $1.3582 and gained against yen to 95.956.

Yields on 10-year U.S. bonds increased to 2.63% and with 30-year maturities increased to 3.66%.