U.S. Stocks Drop; Bankers Talk the Talk

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

U.S. stocks closed lower on weak trading in banks and commodities. Bank leaders met the U.S. President and resisted his calls to separate commercial and investment banking operations but sought clarity on new regulatory regime and compensation restrictions. European markets closed lower.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– U.S. stocks closed lower on weakness in banks and commodities stocks. Bank leaders met President and resisted his calls to separate commercial banking and investment banking operations and sought clarity on new regulatory regime and compensation restrictions.[/R]

Global Markets

U.S. stocks closed lower on a day when bank leaders met the U.S. President. The bank leaders pressed for clarity on executive compensation and relaxation on regulatory regime and resisted on the President’s call to separate the investment banks from the commercial banking operations.

The two businesses were allowed to operate under the same company after the Glass-Steagall Act was watered down in 1999 after nearly seventy years. The current crisis origins date back to the overturn of the separation act.

Ken Lewis, chief executive of Bank of America, Lloyd Blankfein of Goldman Sachs Group Inc defended the current structure in media comments after the meeting. Goldman Sachs is the most prominent investment banker in the world and Bank of America recently purchased Merrill Lynch to bolster its investment banking unit.

In earnings, Accenture dropped 13% after lowering its earnings estimate for the year and quarterly loss at KB Home declined. Financials traded lower as investors worry of more losses related to commercial real estate and weak housing market. Accenture, AIG, Aracruz and BJ Services fell.

Banks drag European shares. Carmakers rebound. The UK statistics office lowered its estimate of fourth quarter GDP decline on a sharply higher decline in construction activities. Barclays surged 24% on the media speculation that regulators believe that the troubled bank has enough capital for now.

Stocks in Japan closed higher for the week on the optimism that U.S. economy may stop deteriorating further. Weak earnings from Nippon Yusen K.K. and weaker outlook of Komatsu Ltd lowered the investors sentiment. Credit Saison Company led gainers in the Nikkei 225 index with a rise of 10.3%.

North American Markets

Dow Jones Industrial Average dropped 148.38 or 1.9% to a close of 7,776.18, S&P 500 Index decreased 16.92 or 2.1% to 815.94, and Nasdaq Composite Index decreased 41.80 or 2.6% to close at 1,545.20.

Of the stocks in S&P 500 index, 64 increased, 434 declined and 2 were unchanged.

CB Richard Ellis led decliners in the S&P 500 index with a loss of 15% followed by losses in Developers Diversified of 2.2%, in Host Hotels REIT of 11.7%, in Tesoro Corp of 10.3%, in Meredith Corp of 8.5% and in Simon Property of 8.5%.

Waters Corp led gainers in the S&P 500 index with a rise of 9.2% followed by gains in Dynegy Inc of 8.6%, in Lincoln National Corp of 8.4%, in SLM Corp of 8.2% and in Compuware Corp of 7.1%.

South American Markets Indexes

Mexico Bolsa Index decreased 227.08 or 1.1% to 20,315.17. Brazil Bovespa Stock Index fell 681.37 or 1.60% to 41,907.29.

Argentina markets declined 0.5%, Chile decreased 0.12% and Peru increased 1.3%. Venezuela added 0.01% and Colombia increased 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 26.35 or 0.67% to 3,898.85, in Paris CAC 40 Index decreased 51.45 or 1.78% to close at 2,840.62 and in Frankfurt DAX index lower 55.82 or 1.31% to close at 4,203.55. In Zurich trading SMI decreased 94.41 or 1.90% to close at 4,872.33.

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.

Commodities, Metals, and Currencies

Crude oil decreased $1.96 to close at $52.38 a barrel for a front month contract, natural gas decreased 30 cents to $3.74 per mBtu and gasoline futures decreased 4.30 cents to close at 148.79 cents per gallon.

Wheat futures closed down 7.25 cents in Chicago trading and closed at $5.07 a bushel. Sugar decreased 13 cents in trading at 12.62 cents a pound. Soybean future closed down 27 cent to $9.17 a bushel.