U.S. Stocks Struggle; Legg Mason Drops 18%

123jump.com Staff
05 May, 2009
New York City

U.S. stocks traded volatile as service industry index showed a smaller decline in April. Fed chairman in his prepared remarks focused on the fragile economic conditions. Legg Mason reported a larger loss compared to a year ago and D R Horton quarterly loss declined.

[R]10:30AM New York – U.S. stocks traded volatile as service industry index showed a smaller decline in April. Legg Mason reported a larger loss compared to a year ago and D R Horton quarterly loss declined.[/R]

In the early trading stocks trended lower. Investors are anxiously awaiting the stress-test results from 19 banks. Fed and regulators are expected to release the finding to banks today and release to the public on May 7.

Bank of America, Citigroup and Regions Financial may be required to raise capital. 123jump.com reported a week ago that seventeen of the nineteen financial institutions will need capital increase in the next nine to twelve months.

The index of service industries showed a contraction in April but at a slower pace than in March. The Institute for Supply Management reported that its non-manufacturing index increase to 43.7 from 40.8 in March. A measure below 50 indicates shrinkage and above indicates expansion.

In prepared remarks to the congressional Joint Economic Committee, Fed chairman Bernanke focused on the fragile economy and its impact from financial system condition. The Fed will also provide more information on borrowers and details of transactions in the various lending programs. However, he gave no indication of the results of the stress-tests.

Filene’s Basement Inc filed for bankruptcy protection for the second time in a decade. The clothing apparel retailer has been battling with falling revenues and tight operating margins.

Cognizant Technology Solutions ((CTSH)) surged 6.1% after it reported better than expected earnings and estimated higher revenues in the current quarter.

Constellation Energy Group ((CEG)) declined 5.3% or $1.34 to $23.89 after it reported first quarter adjusted income of 74 cents a share.

D.R. Horton ((DHI)) declined 3.3% to $13.05 after it reported quarterly loss of 34 cents a share compared to $4.14 a share.

Legg Mason ((LM)) dropped 19% or $4.24 after it reported fourth quarter loss of $2.29 a share or $325 million on revenues decline to $617.2 million from $1.07 billion in the quarter a year ago. The company also saw net outflow of $43.5 billion in assets under management compared to $77 billion outflow in the third quarter.

Asset under management declined to $632.4 billion, a decline of 9% from December end and 33% fall from the end of March 2008.

Index Gainers & Losers

The S&P 500 index declined 2.28 to 904.96 and of the stocks in the index, 209 increased, 282 declined and 9 were unchanged.

Legg Mason Inc led decliners in the S&P 500 index with a loss of 9.6% followed by losses in Avon Products of 9.1%, in Constellation Energy of 8.9%, in AK Steel of 4.6%, in NVidia Corp of 4.4% and in Public Storage of 4.4%.

AIG led gainers in the index with a rise of 16% followed by gains in Wynn Resorts Ltd of 11.1%, in Molson Coors of 8.8%, in Intercontinental Hotel Group of 8.8%, in Kraft Foods Inc of 7.3% and in Principal Financial of 6.4%.

Asian Markets Review

The Hang Seng index in Hong Kong increased 49.03 or 0.30% closed to 16,430.08, CSI 300 index in China higher 12.71 or 0.47% closed to 2,727.01. ASX 200 index in Australia increased 7.40 or 0.19% closed to 3,890.40. The KL Composite index in Malaysia lower 0.49 or 0.05% closed to 1,008.87.The Markets of Tokyo were closed today.

The JSE Index in Indonesia decreased 16.08 or 0.90% closed to 1,772.07. The Sensex index in India decreased 3.67 or 0.03% closed to 12,131.08. The Markets of South Korea and Thailand were closed today.

Europe Markets Review

In London FTSE 100 Index traded higher 121.74 or 2.87% to 4,364.96, in Paris CAC 40 Index increased 9.90 or 0.31% to 3,247.87 and in Frankfurt DAX index traded higher 3.87 or 0.08% to 4,906.32. In Zurich trading SMI decreased 11.41 or 0.21% to 5,306.93.