U.S. Stocks Waver; Oil, Copper Volatile

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

U.S. stocks opened higher on comments from Treasury Secretary but closed lower ahead of stress-test results. The central banks in Europe and England took accommodative stance to the economy. The ECB lowered rates and BoE increased its plan to purchase government debt and kept the rate unchanged.

[R]4:00PM New York, 10:00PM Frankfurt – U.S. stocks opened higher on comments from Treasury Secretary but closed lower ahead of stress-test results. Same store sales in April increased at 0.7% and weekly unemployment claims were the lowest in 14 weeks. The central banks in Europe and England took accommodative stance to the economy.[/R]

Federal Reserve reported that 19 banks undergoing stress test need to raise additional $75 billion to increase their capital ratios, in case the economy worsens further and values of the securities they hold fall. The Fed determined that banks need $185 billion of additional capital buffer but adjusted the amount counting plans by banks to raise capital, sell assets and shrink operations.

U.S. stocks in the regular trading hours closed lower on the worries that the banks may be asked to raise more capital. The Fed announcement was greeted by the executives and people in the industry and detractors stressed that the tests were not stressful enough.

Same store retail sales in April increased at 0.7% and unemployment claims at the end of the last week were 601,000, the lowest in 14 weeks.

General Motors reported smaller than expected loss but indicated that it is running out of cash fast. The automaker sales dropped nearly 50% and reported a loss of $6 billion.

The ECB lowered its key lending rate to 1% and the Bank of England left its key rate unchanged at 0.5%. The central banks are now focused on providing additional liquidity through direct lending and purchasing government debts.

UK stocks closed flat after the Bank of England left its key rate unchanged and the ECB lowered its rate to 1%. The Bank of England said that it will increase its purchase of government debt by £50 billion. Lloyds declined sharply and dragged other banks lower on estimate of higher loan losses.

Stocks in Japan closed higher on optimistic view of the global economy, rising commodities prices and freight rate index. Investors bid up stocks after three days of holiday and on the view that U.S. banks will not be nationalized.

Stocks in Mumbai trading closed higher led by a rise in metals and energy related companies. Shipping companies surged after China reported a record surge in iron ore exports in April. Realty companies and banks increased on the optimism that banks are willing to increase lending to developers.

Australian stocks surged after the unexpected fall in the unemployment rate and a rise in international prices of metals and energy. The Australian dollar gained against most currencies after the unemployment rate declined to 5.4% in April and crude oil price jumped above $56 a barrel.

North American Markets

Dow Jones Industrial Average declined 102.43 or 1.20% to a close of 8,409.85, S&P 500 Index lost 12.14 or 1.3% to 907.39, and Nasdaq Composite Index decreased 42.86 or 2.4% to close at 1,716.24. In Toronto TSX Composite Index declined 176.38 or 1.7% to 9,967.05.

Of the stocks in S&P 500 index, 129 increased, 367 declined and 4 were unchanged.

Symantech Corp led decliners in the S&P 500 index with a loss of 14.7% followed by losses in MeadWestvaco Corp of 13%, in Comercia Inc of 12.4%, in KeyCorp of 11.8% and in CB Richard Ellis of 11.7%.

Office Depot Inc led gainers in the S&P 500 index with a surge of 21% followed by gains in Prudential Financial of 20.5%, in Genworth Financial of 20.5%, in Capital One Financial of 18%, in Huntington Bancorp of 12.8% and in Aetna Inc of 12.2%.

South American Markets Indexes

Mexico Bolsa Index decreased 316.73 or 1.3% to 23,589.40. Brazil Bovespa Stock Index dropped 1,441.42 or 2.80% to 50,058.06.

Argentina Merval Index gained 1%, Chile Stock Market Select index increased 0.4% and Peru Lima General Index lost 0.4%. Colombia IGBC General Index edged up 1.9% and Venezuela Stock Market Index traded flat.

Europe Markets Review

In London FTSE 100 Index closed higher 2.19 or 0.05% to 4,398.68, in Paris CAC 40 Index decreased 31.99 or 0.97% to close at 3,251.52 and in Frankfurt DAX index lower 76.61 or 1.57% to close at 4,804.10. In Zurich trading SMI increased 6.37 or 0.12% to close at 5,325.63.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 408.33 or 4.55% to 9,385.70, Hang Seng index in Hong Kong increased 383.32 or 2.28% closed to 17,217.89, CSI 300 index in China higher 2.10 or 0.08% closed to 2,767.08. ASX 200 index in Australia increased 71.60 or 1.85% closed to 3,938.70. The KL Composite index in Malaysia lower 0.49 or 0.05% closed to 1,023.47.

The Kospi Index in South Korea increased 7.63 or 0.55% to close at 1,401.08. SET index in Thailand closed higher 4.57 or 0.87% to 527.72 and JSE Index in Indonesia increased 30.52 or 1.70% closed to 1,828.85. The Sensex index in India increased 164.19 or 1.37% closed to 12,116.94.

Commodities, Metals, and Currencies

Crude oil decreased $0.08 to close at $56.26 a barrel for a front month contract, natural gas increased 29 cent to $4.18 per mBtu and gasoline futures increased 3.20 cents to close at 166.00 cents per gallon.

Wheat futures closed up 11.50 cents in Chicago trading and closed at $5.70 a bushel. Sugar increased 0.13 cent in trading at 15.49 cents a pound. Soybean future closed down 16.00 cent to $11.02 a bushel.

Gold increased $0.30 in New York trading to close at $911.30 per ounce, silver closed up $0.13 to $13.84 per ounce and copper for the front month delivery decreased 5.65 cents to $2.13 per pound.

Dollar edged lower against euro to $1.3402 and closed down against yen to 99.23.

Yields on 10-year U.S. bonds increased to 3.33% and with 30-year maturities closed up at 4.31%.