U.S. Stocks Fall, Bankers Meet President

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

U.S. stocks edge lower ahead of meeting between bank leaders and the U.S. President. Accenture falls after lowering its earnings estimate for the year and quarterly loss at KB Home declined. European markets traded lower and Barclays surged on speculation.

[R]10:00AM New York – U.S. stocks edge lower ahead of meeting between bank leaders and the U.S. President. Accenture falls after lowering its earnings estimate for the year and quarterly loss at KB Home declined. European markets traded lower and Barclays surged on speculation.[/R]

Stocks in early trading in New York dropped more than 1% ahead of meeting of leading bankers with the President. European markets traded lower at mid-day and Asian markets edged higher at close.

President Obama is expected to meet chief executives of JP Morgan Chase, Goldman Sachs and Citigroup and seek their support for the public-private partnership for the purchase of toxic assets. Even though publicly the industry leaders have expressed their desire to work with the government privately they have expressed their reservations.

Several sources in the industry have confirmed that banks are concerned that actual prices of the toxic debts may be substantially lower than the values recorded on the books of the banks. The price discovery in the auction that the Treasury wants to conduct may lead to another round of losses at banks and wider sell-off in the stock market.

Lawmakers are increasingly focusing on the nexus between former Treasury Secretary Henry Paulson, AIG and Goldman Sachs. Goldman Sachs was the largest recipient of money received by AIG from the U.S. government.

Earnings Update

Accenture Limited, ((ACN)) the technology outsourcing and consulting firm said second quarter revenues fell 6% to $5.27 billion from $5.61 billion a year ago. Net income in the quarter rose 1.2% to $411.4 million or 63 cents per diluted share compared to net income of $406.6 million or 64 cents per share a year ago.

Lululemon athletica Inc, ((LULU)) the Canadian athletic apparel maker said fourth quarter revenues rose 0.1% to $103.9 million from $104 million a year ago. Net income in the quarter fell 25% to $10.9 million or 16 cents per diluted share compared to net income of $14.6 million or 22 cents per share a year ago.

Net revenues for the fiscal year 2008 rose 30.9% to $353.5 million from $269.9 million a year ago. Net income for the year rose 28% to $39.4 million or 55 cents per diluted share compared to net income of $30.8 million or 45 cents per share a year ago.

European Markets Update

Barclays Plc ((BCS)) surged more than 8% after unconfirmed reports suggested that the bank may not need additional capital according to the review conducted by the financial regulators. The bank is in the process of selling its iShares exchange traded funds division and is also likely to exchange its bonds and other debt securities for stocks or other debt instruments.

Monte dei Paschi di Siena SpA, the third largest bank in Italy after it sought the government assistance of 1.9 billion euros.

BMW, the luxury German automaker gained more than 4% after it was upgraded by Societe Generale SA citing strong fundamentals according to the NewRatings.com.

Siemens AG ((SI)) gained nearly 1% after it reiterated its earnings forecast for the year a day after it suggested that economic conditions are worsening and earnings at its industrial and medical units may fall short of market estimates.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 9.36 or 0.11% to 8,626.97, Hang Seng index in Hong Kong increased 10.52 or 0.07% closed to 14,119.50, CSI 300 index in China higher 19.14 or 0.77% closed to 2,498.93. ASX 200 index in Australia increased 25.70 or 0.70% closed to 3,672.30. The KL Composite index in Malaysia lower 0.04 or 0.00% closed to 885.43.

The Kospi Index in South Korea decreased 6.29 or 0.51% to close at 1,237.51. SET index in Thailand closed higher 1.41 or 0.32% to 440.81 and JSE Index in Indonesia increased 42.77 or 3.01% closed to 1,462.74. The Sensex index in India increased 45.39 or 0.45% closed to 10,048.49.

Europe Markets Review

In London FTSE 100 Index traded lower 8.22 or 0.21% to 3,916.98, in Paris CAC 40 Index decreased 24.22 or 0.84% to 2,867.85 and in Frankfurt DAX index traded lower 36.44 or 0.86% to 4,222.93. In Zurich trading SMI decreased 57.62 or 1.16% to 4,909.12.