U.S. Stocks 4-Day Decline; Gold Rises

Mukesh Buch
02 Sep, 2009
New York City

U.S. stocks declined for the fourth day in a row on stretched market valuations and weak volume. Private sector eliminated more jobs in August than expected. Auto sales edge up barely on auto rebate program. Crude oil stayed below $70 on higher drawdown in gasoline inventories. Gold jumped $22.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks declined for the fourth day in a row on stretched market valuations and weak volume. Private sector eliminated more jobs in August than expected. Auto sales edge up barely on auto rebate program. Crude oil stayed below $70 on higher drawdown in gasoline inventories. Gold and silver trade up.[/R]

U.S. stocks gained in the morning despite the private jobs report showed 298,000 jobs were lost in August. U.S. productivity increased 6.6% in the second quarter, the sharpest gain in nearly six years.

Automobile sales in August increased 1% from a year ago and first monthly sales increase 22 months. The annualized sales increased to 14.1 million units from 11.2 million in July. Without the auto rebate programs the industry sales would have been 10.5 million.

Gold miners surged after a rise in precious metals prices. Gold added $21.50 or 2.3% and silver increased 2.2% to $15.39. DHT Maritime after it reported lower than expected earnings. Las Vegas Sands completed $600 million bond offering in advance of its public offering in Hong Kong.

European markets closed lower as investors worry that more capital may be needed by the insurance companies to meet the EU requirements. Germany rejected revised bid from RHJ International for Opel. BMW and Daimler report a sharp fall in August sales in the U.S.

BP Plc, the second largest energy company in Europe and the largest oil explorer in the Gulf of Mexico claims to discover one of the largest energy fields in the region.

UK stocks market closed lower as market indexes trade near six-year high earnings multiples. Insurance companies fell sharply on the worries that the EU may require them to raise as much as £50 billion. Lloyds is preparing to raise £10 billion.

North American Markets

Dow Jones Industrial Average decreased 29.93 or 0.3% to a close of 9,280.60, S&P 500 Index decreased 3.29 or 0.3% to 994.75, and Nasdaq Composite Index edged lower 1.82 or 0.09% to close at 1,967.07. Toronto TSX Composite Index increased 11.54 or 0.11% to 10,701.32.

Of the stocks in S&P 500 index, 157 increased, 333 declined and 10 were unchanged.

CA Inc led the decliners in the S&P 500 index with a loss of 7.6% followed by losses in Huntington Bancorp of 7.5%, in SunTrust Banks of 7.2%, in Smith International Inc of 6.7% and in Regions Financial of 6.3%.

Textron Inc led gainers in the S&P 500 index with a rise of 12.2% followed by gains in Motorola Inc 11.4%, in Newmont Mining of 9.2% and in Brown Forman of 5.9%.

South American Markets Indexes

Mexico Bolsa Index increased 204.18 or 1.4% to 27,953.34 Brazil Bovespa Stock Index decreased 429.24 or 0.8% to 55,385.72.

Argentina Merval Index closed up 0.6% and Chile Stock Market Select index edged higher 0.4%, Peru Lima General Index edged higher 0.1% and Colombia IGBC General Index increased 0.1%.

Europe Markets Review

In London FTSE 100 Index closed lower 2.15 or 0.04% to 4,817.55, in Paris CAC 40 Index decreased 10.31 or 0.29% to close at 3,573.13, in Frankfurt DAX index lower 7.45 or 0.14% to close at 5,319.84. In Zurich trading SMI decreased 38.93 or 0.64% to close at 6,089.24.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 249.60 or 2.37% to 10,280.46, Hang Seng index in Hong Kong decreased 350.30 or 1.76% to 19,522.00 and CSI 300 index in China higher 47.23 or 1.66% to 2,890.93. ASX 200 index in Australia decreased 76.40 or 1.69% to 4,438.20. The FTSE Bursa KL Composite index in Malaysia closed lower 3.27 or 0.28% to 1,168.01.

The Kospi Index in South Korea decreased 9.90 or 0.61% to close at 1,613.16. SET index in Thailand closed higher 0.00 or 0.00% to 654.12 and JSE Index in Indonesia decreased 40.99 or 1.76% to 2,285.92. The Sensex index in India decreased 83.73 or 0.54% to 15,467.46.

Commodities, Metals, and Currencies

Crude oil closed unchanged at $68.05 a barrel for a front month contract, natural gas closed down 11 cents to $2.72 per mBtu and gasoline decreased 0.11 cents to 175.05 cents.

Wheat futures closed down 1.50 cents in Chicago trading to $4.85 a bushel. Sugar edged down to 0.56 cents a pound. Soybean future closed down 4.50 cent to $9.51 a bushel.

Gold increased $22.00 in New York trading to close at $978.50 per ounce, silver closed up $0.31 to $15.36 per ounce and copper for the front month delivery increased 0.75 cent to $2.826 per pound.

Dollar edged higher against euro to $1.426 and closed lower against the Japanese yen to 92.23.

Yield on 10-year U.S. bonds decreased at 3.31% and with 30-year maturities edged lower to 4.12%.