Banks Surge; DR Horton Falls

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

U.S. stocks rallied on the hopes that most banks will not require additional capital. Hover, the optimism may be misplaced if unemployment surpasses 10% and economy weakens beyond the third quarter. Crude oil surged above $55 a barrel and gold and copper closed higher.

[R]4:00PM New York, 10:00PM Frankfurt – U.S. stocks rallied on the hopes that most banks will not require additional capital. Hover, the optimism may be misplaced if unemployment surpasses 10% and economy weakens beyond the third quarter. IMF estimates that the U.S. banks need more than $100 billion in capital.[/R]

U.S. stocks closed higher on the belief that most banks will not require additional capital for now. Stress test results are expected after the close of regular trading hours tomorrow.

The private sector shed less than 500,000 jobs in April. Bank of America is said to need $34 billion to meet its regulatory capital requirements and Citigroup may need $40 billion. JP Morgan, American Express and Bank of New York Mellon are the three of 19 banks that are least likely to need additional capital to meet regulatory stress test.

Homebuilders led decliners in the broader indexes after DR Horton announced plans to offer $400 million convertible bond offering. The home builder will use proceeds for general expenses and repayment of outstanding of debt. DR Horton, the largest home builder debt will be senior unsecured debt.

Stocks in Hong Kong and Shanghai rallied on the hopes that banks will report better than expected earnings. Alibaba.com earnings fell after it increased marketing expenses and offered cheaper subscriptions to its Web site.

European markets focused on the earnings and global economic recovery. The service industry in Europe and in UK declined at a slower pace in April. The European Parliament passed the law to tighten regulations for banks and will require member nations to implement before 2011

UK stocks advanced on a rise in metals and mining companies. Ahead of Bank of England rate decision tomorrow, investors focused on the economic condition beyond recession. Service industry decline appears to stabilize and consumer confidence is on the rebound. British Air traffic increased in April.

Stocks in Mumbai declined on the election jitters and worries that recent rally may have stretched valuations too high. In volatile trading, stocks in the final hour fell. Banks, financial services and steel makers led the decliners.

North American Markets

Dow Jones Industrial Average increased 101.63 or 1.21% to a close of 8,512.28, S&P 500 Index added 15.73 or 1.7% to 919.53, and Nasdaq Composite Index increased 4.98 or 0.3% to close at 1,759.10. In Toronto TSX Composite Index increased 262.71 or 2.7% to 10,143.43.

Of the stocks in S&P 500 index, 307 increased, 188 declined and 5 were unchanged.

DR Horton led decliners in the S&P 500 index with a loss of 12.6% followed by losses in Pitney Bowes Inc of 10.7%, in General Motors of 10.3%, in Pulte Homes Inc of 8.1%, in Centex Corp of 8% and in Harris Corp of 8%.

Lincoln National Corp led gainers in the S&P 500 index with a surge of 33% followed by gains in Zion Bancorp of 26.1%, in Principal Financial of 24.2%, in Marshall & Ilsley of 23.3%, in Hartford Financial Services of 17.9% and in Bank of America of 17%.

South American Markets Indexes

Mexico Bolsa Index increased 475.89 or 2.1% to 23,906.13. Brazil Bovespa Stock Index gained 829.70 or 1.64% to 51,499.48.

Argentina Merval Index gained 3.4%, Chile Stock Market Select index increased 1.1% and Peru Lima General Index added 3.72%. Colombia IGBC General Index edged up 1.2% and Venezuela Stock Market Index closed down0.47%.

Europe Markets Review

In London FTSE 100 Index closed higher 59.55 or 1.37% to 4,396.49, in Paris CAC 40 Index increased 58.51 or 1.81% to close at 3,283.51 and in Frankfurt DAX index higher 27.68 or 0.57% to close at 4,880.71. In Zurich trading SMI increased 38.33 or 0.73% to close at 5,319.26.

Asian Markets Review

The Hang Seng index in Hong Kong increased 404.49 or 2.46% closed to 16,834.57, CSI 300 index in China higher 37.96 or 1.39% closed to 2,764.98.ASX 200 index in Australia decreased 23.30 or 0.60% closed to 3,867.10. The KL Composite index in Malaysia higher 15.09 or 1.50% closed to 1,023.96..

The Kospi Index in South Korea decreased 4.47 or 0.32% to close at 1,393.45. SET index in Thailand closed higher 16.88 or 3.33% to 523.14 and JSE Index in Indonesia increased 26.27 or 1.48% closed to 1,798.34. The Sensex index in India decreased 178.33 or 1.47% closed to 11,952.75.

Commodities, Metals, and Currencies

Crude oil increased $2.43 to close at $56.27 a barrel for a front month contract, natural gas increased 28 cent to $3.89 per mBtu and gasoline futures increased 6.28 cents to close at 163.50 cents per gallon.

Wheat futures closed up 5.25 cents in Chicago trading and closed at $5.58 a bushel. Sugar increased 0.21 cent in trading at 15.36 cents a pound. Soybean future closed up 17.0 cent to $11.18 a bushel.

Gold increased $7.60 in New York trading to close at $911.90 per ounce, silver closed up $0.29 to $13.71 per ounce and copper for the front month delivery increased 10.60 cents to $2.18 per pound.

Dollar edged lower against euro to $1.3319 and closed down against yen to 98.41.

Yields on 10-year U.S. bonds closed unchanged to 3.16% and with 30-year maturities closed up at 4.09%.