U.S. Stocks Decline; Fannie Mae Seeks $10.7 B

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

U.S. stocks edged lower as investors digested rising unemployment and weak same store sales. Fannie Mae is seeking additional $10.7 billion from the U.S. Treasury and indicated that it many need more assistance in the future.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks edged lower as investors digested rising unemployment and weak same store sales. Fannie Mae is seeking additional $10.7 billion from the U.S. Treasury and indicated that it many need more assistance in the future.[/R]

U.S. stocks trended lower and closed down after the release of weekly jobless claims and weaker than expected same store sales from retailers. Fannie Mae sought additional funding from the U.S. Treasury Department and booked rising loan losses.

The preliminary estimate of seasonally adjusted claims of unemployment in the week ending July 25 decreased 38,000 from the revised 588,000 claims in the previous week. The insured unemployment rate was 4.7% in the week ending July 25.

In another development, Fannie Mae sought additional $10.7 billion from the Treasury Department and reported smaller quarterly loss from a year ago. The loss is still significant. With the current request, the U.S. government’s exposure to Fannie Mae will increase to $45.9 billion

The government controlled housing lender in the second quarter lost $14.8 billion or $2.67 a share compared to $23.2 billion or $4.09 a share a year ago. The non-performing loans held by the lender increased to $171 billion at the end of June compared to $144.9 billion in March and $119.2 billion at the end of last year.

Fannie Mae also noted in the press release, “Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from the Treasury.”

MetroPCS Communications, Inc led the decliners in the S&P 500 index with a loss of 27.5%. AmeriCredit posts fourth quarter profit. Eagle Bulk Shipping Inc second quarter earnings fall.

The European Central Bank left its reference lending rate at 1% and did not expand its bond purchase program. German factory orders increased 4.5% in June, fourth monthly gain on growing export orders. Veolia Environnment SA dropped 8% after it reported net income declined more than 45%.

The Bank of England expanded its bond purchase program by £50 billion to £175 billion and left its key lending rate unchanged at 0.5%. Aviva cuts dividend by 31%. easyJet July traffic gains. Profit dives at Schroders. ITV posts loss and Unilever sales edge higher on new products and price cuts.

The index of leading indicators in Japan surged in June on rising consumer confidence and investor sentiment. Nikon plunged 10% after it offered weak outlook. Rising metals prices lifted resource stocks. Kirin revises its annual revenues and earnings outlook.

Rising mega IPO issues may soak liquidity from Indian market. NHPC Ltd, the largest hydroelectric company announced a plan to raise 6,000 crore rupees. The state controlled NMDC is preparing to sell 5% stake in the mining company.

North American Markets

Dow Jones Industrial Average decreased 24.71 or 0.3% to a close of 9,256.26, S&P 500 Index decreased 5.64 or 0.6% to 997.08, and Nasdaq Composite Index edged lower 19.89 or 1% to close at 1,973.16. Toronto TSX Composite Index decreased 253.56 or 2.3% to 10,793.13.

Of the stocks in S&P 500 index, 168 increased, 327 declined and 5 were unchanged.

MetroPCS Communications, Inc led the decliners in the S&P 500 index with a loss of 29.2% followed by losses in Fifth Third Bancorp of 5.8%, in Healthcare REIT of 5.7%, in Darden Restaurant of 5.7% and in Titanium Metals of 5.5%.

Limited Brands led gainers in the S&P 500 index with a rise of 13% followed by gains in MBIA Inc 12%, in The Gap, Inc of 8% and Hartford Financial Services of 7.9%.

South American Markets Indexes

Mexico Bolsa Index decreased 280.22 or 1% to 27,802.41. Brazil Bovespa Stock Index decreased 629.20 or 1.1% to 55,754.88.

Argentina Merval Index increased 1.6%. Chile Stock Market Select index edged higher 0.8%, Peru Lima General Index dropped 4.3% and Colombia IGBC General Index increased 0.6%.

Europe Markets Review

In London FTSE 100 Index closed higher 43.40 or 0.93% to 4,690.53, in Paris CAC 40 Index increased 19.30 or 0.56% to close at 3,477.83 and in Frankfurt DAX index higher 16.97 or 0.32% to close at 5,369.98. In Zurich trading SMI increased 56.17 or 0.95% to close at 5,968.08.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 135.56 or 1.32% to 10,388.09, Hang Seng index in Hong Kong increased 404.47 or 1.97% to 20,899.24 and CSI 300 index in China dropped 77.82 or 2.08% to 3,663.12. ASX 200 index in Australia increased 61.80 or 1.45% to 4,326.30. The FTSE Bursa KL Composite index in Malaysia closed higher 4.48 or 0.38% to 1,183.97.

The Kospi Index in South Korea increased 5.57 or 0.36% to close at 1,565.04. SET index in Thailand closed higher 9.05 or 1.41% to 649.21 and JSE Index in Indonesia increased 42.91 or 1.85% to 2,359.98. The Sensex index in India decreased 389.80 or 2.45% to 15,514.03.

Commodities, Metals, and Currencies

Crude oil decreased $0.03 to close at $71.94 a barrel for a front month contract, natural gas decreased 30 cents to $3.74 per mBtu and gasoline increased 0.95 cents to 206.07 cents.

Wheat futures closed down 28.50 cents in Chicago trading to $5.28 a bushel. Sugar increased 0.43 cent in trading at 19.80 cents a pound. Soybean future closed down 15 cent to $10.30 a bushel.

Gold decreased $3.40 in New York trading to close at $962.90 per ounce, silver closed down $0.11 to $14.64 per ounce and copper for the front month delivery decreased 6.00 cents to $2.75 per pound.

Dollar edged higher against euro to $1.435 and closed up against the Japanese yen to 95.40.

Yield on 10-year U.S. bond was unchanged at 3.75% and with 30-year maturities decreased to 4.53%.