GM Plunges, CEO Forced Out

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

U.S. stocks declined on the worries that GM may not be able to avert bankruptcy. General Motors dropped 22%. Citigroup, Wells Fargo, Bank of America and Lincoln National fell sharply after Treasury Secretary suggested that banks will need more money from the government.

[R]12:10PM New York – U.S. stocks declined on the worries that GM may not be able to avert bankruptcy. Banks may need more capital according to Treasury Secretary.[/R]

U.S. stocks in the early morning dropped after more worries on banks and auto companies may need to seek bankruptcy protection.

S&P 500 index dropped 23.03 or 2.8% to 792.91 and the Nasdaq index declined 3% or 46.21 to 1,498.99. Dow Jones Industrial Average dropped 266.35 to 7,509.83.

Citigroup, Wells Fargo, Bank of America and Lincoln National fell sharply after Treasury Secretary suggested that banks will need more money from the government.

Citigroup dropped 13%, Bank of America fell 12% and Wells Fargo, Morgan Stanley and U.S. Bancorp declined more than 6%.

General Motors ((GM)) declined 22% or 79 cents to $2.83 after the President Obama task force requested his resignation. The chief executive rick Wagoner was replaced with Fritz Henderson who previously acted as the chief finance officer.

DryShips Inc ((DRYS)) decline 17% or $1.01 to $4.89 after its auditors expressed doubts that the company can continue to operate as a going concern.

The press release with the release of annual report noted that, “the Company’s inability to comply with financial covenants under its current loan agreements as of December 31, 2008, difficulties in meeting its financing needs, its negative working capital position, raise substantial doubt about its ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.”

In Europe, Spain was forced to bail out a bank after savings bank could not find a buyer. The Bank of Spain took over Caja Castilla-La Mancha and the government offered loan guarantees of 9 billion euros. Spain has been battling one of the worst recessions in the last five decades after the bursting of construction bubble and a surge of unemployment to a high of 14%.

In UK, Nationwide Building Society agreed to acquire Scotland based Dunfermline Building Society. The move was arranged by the UK government.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 390.89 or 4.53% to 8,236.08, Hang Seng index in Hong Kong decreased 663.17 or 4.70% closed to 13,456.33, CSI 300 index in China lower 14.44 or 0.58% closed to 2,484.49. ASX 200 index in Australia decreased 67.90 or 1.85% closed to 3,604.40. The KL Composite index in Malaysia lower 16.09 or 1.82% closed to 869.34.

The Kospi Index in South Korea decreased 40.05 or 3.24% to close at 1,197.46. SET index in Thailand closed lower 11.21 or 2.54% to 429.60 and JSE Index in Indonesia decreased 43.65 or 2.98% closed to 1,419.09. The Sensex index in India decreased 480.35 or 4.78% closed to 9,568.14.

Europe Markets Review

In London FTSE 100 Index traded lower 69.87 or 1.79% to 3,828.98, in Paris CAC 40 Index decreased 67.92 or 2.39% to 2,772.70 and in Frankfurt DAX index traded lower 134.79 or 3.21% to 4,068.76. In Zurich trading SMI decreased 74.43 or 1.53% to 4,797.90.