U.S. Stocks On Hold; State Street Falls

Mukesh Buch
10 Aug, 2009
New York City

U.S. stocks edged lower ahead of Fed meeting this week. The Fed is expected to leave rates unchanged and leave most of the direct lending programs in place. Consumer bankruptcies increased 34% in July. Freddie Mac surged on a quarterly profit after two years.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks edged lower ahead of Fed meeting this week. The Fed is expected to leave rates unchanged and leave most of the direct lending programs in place. Consumer bankruptcies increased 34% in July. Freddie Mac surged on a quarterly profit after two years.[/R]

U.S. stocks edged lower after a rally that stretched valuations in the last five weeks. The benchmark indexes in Europe declined as well. Home builders, real estate companies and hotel operators led the decliners in the S&P 500 index after bonds yields declined.

State Street declined 2.4% after the asset custodian said it may lack sufficient reserves if the U.S. Securities and Exchange Commission seeks monetary compensation for the ongoing litigation.

Consumer bankruptcy surged 34% from a year ago to 126,000 in July according to American Bankruptcy Institute. The consumer bankruptcies for the year may reach as high as 1.4 million according to the ABI.

On a fall in metals prices, resource stocks declined.

European real estate firms declined on weak rents and falling property values. Banks in Italy edged higher. Bourbon SA, the offshore marine service first half revenues increased 11.2%. Heidelberger Druckmaschinen AG finalized its €1.4 billion credit agreement.

Freddie Mac surges after it reported its first profit in two years. The mortgage lender also paid $1.1 billion in dividends to U.S. Treasury. Dish Network surged 10% on better than expected earnings. Best Buy declined on rating downgrade. Barnes & Noble surges 10% on a related party acquisition.

Resolutions revised offer for Friends Provident values the insurer at £1.85 billion. Lloyds is looking raise between £10 and £15 billion. Morgan Sindall profit slides 28%. Geong International surged 28% after it won new business in China.

Weak monsoon rains may trim the economic expansion by as much as 1% in India. Tata Steel targeted $800 million expansion plan. NHPC Ltd IPO attracts more binds on the second day of subscription. Bharti – MTN merger may face financing hurdles.

Australian home loans increased 0.3% to A$23.1 billion. Fortescue Metals reported net annual profit on a rise in iron ore production. Bank stocks fell ahead of earnings from Commonwealth Bank. Julia Gillard, the Australian Education Minister fails to act on universities that lack credentials.

North American Markets

Dow Jones Industrial Average decreased 32.12 or 0.3% to a close of 9,337.95, S&P 500 Index fell 3.38 or 0.3% to 1,007.10, and Nasdaq Composite Index edged lower 8.01 or 0.4% to close at 1,992.24. Toronto TSX Composite Index decreased 91.96 or 0.8% to 10,793.67.

Of the stocks in S&P 500 index, 195 increased, 298 declined and 7 were unchanged.

Marriott International led the decliners in the S&P 500 index with a loss of 6.6% followed by losses in Starwood Hotels of 6.4%, in Apartment Investment of 6.4%, in DR Horton Inc of 5.4% and in Best Buy Co Inc of 5.3%.

Dynegy Inc led gainers in the S&P 500 index with a rise of 15.5% followed by gains in Hormel Foods Corp 5.8%, in AIG of 5.8% and Zions Bancorporation of 5.1%.

South American Markets Indexes

Mexico Bolsa Index increased 125.77 or 0.45% to 28,305.32. Brazil Bovespa Stock Index advanced 500.50 or 0.9% to 56,830.01.

Argentina Merval Index decreased 0.4%. Chile Stock Market Select index edged lower 0.1%, Peru Lima General Index fell 0.4% and Colombia IGBC General Index increased 0.7%.

Europe Markets Review

In London FTSE 100 Index closed lower 9.36 or 0.20% to 4,722.20, in Paris CAC 40 Index decreased 16.60 or 0.47% to close at 3,504.54 and in Frankfurt DAX index lower 40.84 or 0.75% to close at 5,418.12. In Zurich trading SMI decreased 18.85 or 0.31% to close at 6,007.55.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 112.17 or 1.08% to 10,524.26, Hang Seng index in Hong Kong increased 554.15 or 2.72% to 20,929.52 and CSI 300 index in China lower 10.56 or 0.30% to 3,544.54. ASX 200 index in Australia increased 4.70 or 0.11% to 4,304.10. The FTSE Bursa KL Composite index in Malaysia closed higher 3.12 or 0.26% to 1,188.00.

The Kospi Index in South Korea increased 0.11 or 0.01% to close at 1,576.11. SET index in Thailand closed lower 0.45 or 0.07% to 643.75 and JSE Index in Indonesia increased 40.43 or 1.72% to 2,389.56. The Sensex index in India decreased 150.47 or 0.99% to 15,009.77.

Commodities, Metals, and Currencies

Crude oil decreased $0.07 to close at $70.86 a barrel for a front month contract, natural gas decreased 2 cents to $3.66 per mBtu and gasoline increased 3.2 cents to 204.00 cents.

Wheat futures closed up 3.25 cents in Chicago trading to $5.20 a bushel. Sugar increased 1.19 cent in trading at 22.00 cents a pound. Soybean future closed down 28.5 cent to $10.10 a bushel.

Gold decreased $12.20 in New York trading to close at $947.30 per ounce, silver closed down $0.31 to $14.36 per ounce and copper for the front month delivery decreased 1.65 cents to $2.769 per pound.

Dollar edged higher against euro to $1.414 and closed down against the Japanese yen to 97.16.

Yield on 10-year U.S. bonds decreased to 3.76% and with 30-year maturities increased to 4.52%.