U.S. Bonds, Stocks Rebound; Weak Housing

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

U.S. stocks rebounded after the U.S. bonds recovered and yields dropped. Housing market remained weak as more home owners fall behind on their mortgages. Crude oil surged after inventories declined. GM bankruptcy is imminent.

[R]5:00 PM New York, 10:00 PM London, 8:00AM Sydney – U.S. stocks rebounded after the U.S. bonds recovered and yields dropped. Housing market remained weak as more home owners fall behind on their mortgages. Crude oil surged after inventories declined. GM bankruptcy is imminent.[/R]

U.S. stocks closed higher on a barrage of economic data and a fall in Treasury yields. The energy complex stocks gained after crude oil and natural gas closed higher.

Sales of new single family homes increased 0.3% in April to seasonally adjusted 352,000 compared to prior month, durable goods orders increased 1.9% in the month and weekly jobless claims in the prior week declined 13,000. Weekly inventories crude oil declined 5.4 million barrels at the end of last week.

Home builders dropped sharply after mortgage delinquencies and foreclosure rates were record high since 1972.

The U.S. Treasury Department completed $26 billion of 7-year bond offering with maximum yield of 3.3%. The auction bid-to-cover ratio was 2.26. The 10-year and 30-year bond yields declined.

General Motors may file bankruptcy protection as early as June 1.

General Motors and its debt holders are locked in negotiations that may dictate the future of the automotive giant’s future. GM in its latest proposal is offering up to 25% stake in the company to bond holders, higher than 20% stake controlled by the workers union.

Though the discussions may drag on while the company is reorganized under bankruptcy, the brutally competitive marketplace and weak labor market may not offer much hope for the new GM outside of court protection. The bottom line, the future of GM will be uncertain for many more years to come, under or out of court protection.

UK market averages declined on weak earnings from asset management companies and retail sales. Speedy Hire to raise £100 million in a rights offering. Wolseley declined after profit dropped in the nine-month period. PayPoint reported annual profit increased on healthy profit margin. Man Group declined 7% after assets under management fell.

Japan Tobacco finalized its terms of five year bonds sales that are rated AA. Sumitomo Mitsui Financial plans to raise as much as $8.6 billion after it made a disastrous investment in Barclays. April retail sales decline in Japan marked the eighth monthly fall in a row.

Investors in India focused on economic growth prospects and higher earnings while rating agencies sounded alarm of rising government deficit. The government is likely to record annual deficit of 10% or higher for the second year in a row.

Australian stocks closed lower on weak global markets. The strength in oil and firm metal prices also supported the Aussie. Babcock & Brown Japan Property Trust surged after it sold one of its properties in Tokyo. Monadelphous Group was awarded A$170 million contract from Woodside Petroleum.

North American Markets

Dow Jones Industrial Average increased 103.78 or 1.2% to a close of 8,403.80, S&P 500 Index added 13.77 or 1.5% to 906.83, and Nasdaq Composite Index edged higher 20.71 or 1.2% to close at 1,751.79. Toronto TSX Composite Index closed up 250.21 or 2.5% to 10,392.37.

Of the stocks in S&P 500 index, 371 increased, 125 declined and 4 were unchanged.

Pulte Homes Inc led decliners in the S&P 500 index with a loss of 7.8% followed by losses in Centex Corp of 6.9%, in Nordstrom Inc of 6.5%, in KB Home of 5.9% and in Big Lots Inc of 5.8%.

Genworth Financial led gainers in the S&P 500 index with a surge of 9.7% followed by gains in Cigna Corp of 7.7%, in Aflac Inc of 7.5%, in Torchmark Corp of 7.5%, in AES Corp of 7.2% and in CME Group Inc of 7.1%.

South American Markets Indexes

Mexico Bolsa Index increased 151.43 or 0.6% to 24,659.24. Brazil Bovespa Stock Index added 1,249.13 or 2.4% to 53,040.74.

Argentina Merval Index declined 0.4%, Chile Stock Market Select index increased 1.4% and Peru Lima General Index added 1.2%. Colombia IGBC General Index edged higher 0.8% and Venezuela Stock Market Index edged down 0.2%.

Europe Markets Review

In London FTSE 100 Index closed lower 28.69 or 0.65% to 4,387.54, in Paris CAC 40 Index decreased 31.16 or 0.95% to close at 3,263.70 and in Frankfurt DAX index lower 67.89 or 1.36% to close at 4,932.88. In Zurich trading SMI decreased 68.83 or 1.27% to close at 5,350.59.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 12.62 or 0.13% to 9,451.39, ASX 200 index in Australia decreased 45.40 or 1.19% closed to 3,755.70. The KL Composite index in Malaysia lower 6.44 or 0.61% closed to 1,041.24.The Markets of Hong Kong and China were closed today.

The Kospi Index in South Korea increased 30.15 or 2.21% to close at 1,392.17.SET index in Thailand closed higher 0.02 or 0.00% to 555.43 and JSE Index in Indonesia increased 10.03 or 0.53% closed to 1,902.88. The Sensex index in India increased 186.37 or 1.32% closed to 14,296.01.

Commodities, Metals, and Currencies

Crude oil increased $1.31 to close at $64.76 a barrel for a front month contract, natural gas increased 31 cent to $3.95 per mBtu and gasoline futures increased 1.78 cents to close at 190.95 cents per gallon.

Wheat futures closed up 4.75 cents in Chicago trading and closed at $6.305 a bushel. Sugar decreased 0.13 cent in trading at 15.46 cents a pound. Soybean future closed down 8 cent to $11.79 a bushel.

Gold increased $6.50 in New York trading to close at $961.70 per ounce, silver closed up $0.27 to $15.135 per ounce and copper for the front month delivery increased 2.00 cents to $2.14 per pound.

Dollar edged lower against euro to $1.3943 and closed up against the Japanese yen to 96.87.

Yields on 10-year U.S. bonds decreased to 3.64% and with 30-year maturities closed down at 4.50%.