Investors Nervous After August Home Sales

Mukesh Buch
24 Sep, 2009
New York City

U.S. stocks drifted lower as three initial public offering hit the market. Market indexes fell after the release of home sales data in August. Crude oil, copper and silver dropped 4%. Markets in North and South America and in Europe fell between 0.7% and 2.3%.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks drifted lower as three initial public offering hit the market. Market indexes fell after the release of home sales data in August. Crude oil, copper and silver dropped 4%.[/R]

U.S. stocks edged higher in the morning after the release of better than expected jobless claims but traded lower on home sales decline in August. Jobless claims decreased 21,000 last week. A123 Systems prices its initial public offering above its initial pricing range. The Fed also prepared to pull back of $1.25 trillion in agency securities and mortgage agency debt by the end of first quarter in 2010, one quarter later.

Home sales in August fell 2.7% after rising 7.2% in July. The sharp decline sales and prices occur as more foreclosed homes are dumped in the market and mortgage conditions remain tight. Home builders declined with Standard Pacific down more than 6%.

The battery developer A123 Systems increased the size of the offering and price to raise $378 million. The loss making company plans to build a facility in Michigan State to conduct most of its research & development. With more than 23 million shares changing hands, the stock surged 45% in the first hour.

Home builders led the decliners in New York trading after the weak home sales report. A123 Systems surged 45% after it priced offering above its offer price range. Red Hat led gainers in the S&P 500 index on rising sales and earnings. Nomura fell after it plans to raise $5.6 billion. Paychex Falls.

UK stocks edged lower after U.S. home sales fell in August. LSE reported 43% decline in average trading value in the first five months ending in August. JJB Sports Plc first half loss widened. Great Portland Estate acquires Central London building for £46 million.

Retailers in Europe declined after H&M reported weaker than expected earnings rise of 4%. August same store sales fell 11%. Carlsberg A/S declined after Russia lifted duty beginning next year to 2012. France reported 2.55 million people looking for work in August.

North American Markets

Dow Jones Industrial Average decreased 41.11 or 0.4% to a close of 9,707.44, S&P 500 Index fell 10.09 or 1% to 1,050.78, and Nasdaq Composite Index declined 23.81 or 1.1% to close at 2,107.61. Toronto TSX Composite Index dropped 231.78 or 2% to 11,285.76.

Of the stocks in S&P 500 index, 320 increased, 175 declined and 5 were unchanged.

Paychex, Inc led the decliners in the S&P 500 index with a loss of 5.9% followed by losses in Bed Bath & Beyond Inc of 3.5%, in Janus Capital Group Inc of 2.6%, in Smith International, Inc of 2.3% and in Electronic Arts Inc of 2.1%.

Red Hat Inc led gainers in the S&P 500 index with a rise of 14.8% followed by gains in Citrix Systems, Inc 5.1%, in Dynegy Inc of 4.4% and in Cintas Corporation of 4.4%.

South American Markets Indexes

Mexico Bolsa Index decreased 494.56 or 1.7% to 28,465.11 and Brazil Bovespa Stock Index declined 449.91 or 0.7% to 60,046.28.

Argentina Merval Index closed down 0.8% and Chile Stock Market Select index decreased 0.1%, Peru Lima General Index edged down 2.3% and Colombia IGBC General Index decreased 0.3%.

Europe Markets Review

In London FTSE 100 Index closed lower 60.10 or 1.17% to 5,079.27, in Paris CAC 40 Index decreased 63.43 or 1.66% to close at 3,758.36, in Frankfurt DAX index lower 96.84 or 1.70% to close at 5,605.21. In Zurich trading SMI decreased 74.39 or 1.17% to close at 6,275.44.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 173.68 or 1.67% to 10,544.22, Hang Seng index in Hong Kong decreased 544.79 or 2.52% to 21,050.73 and CSI 300 index in China higher 20.86 or 0.68% to 3,080.93. ASX 200 index in Australia decreased 32.90 or 0.69% to 4,701.20. The FTSE Bursa KL Composite index in Malaysia was lower 1.01 or 0.08% to 1218.06.

The Kospi Index in South Korea decreased 17.59 or 1.03% to close at 1,693.88. SET index in Thailand closed lower 1.98 or 0.27% to 728.54. JSE Index in Indonesia increased 11.92 or 0.48% to 2,468.90.The Sensex index in India increased 61.93 or 0.37% to 16,781.43.

Commodities, Metals, and Currencies

Crude oil decreased $2.92 to $66.05 a barrel for a front month contract, natural gas edged up 10 cents to $3.96 per mBtu and gasoline decreased 7.27 cents to 163.22 cents.

Wheat futures closed up 13.00 cents in Chicago trading to $4.73 a bushel. Sugar edged down 0.16 cents a pound to 22.92 cents. Soybean future closed down 1.00 cents to $9.19 a bushel.

Gold decreased $19.50 in New York trading to close at $994.90 per ounce, silver closed down $0.64 to $16.27 per ounce and copper for the front month delivery decreased 11.80 cent to $2.69 per pound.

Dollar edged higher against euro to $1.465 and closed lower against the Japanese yen to 91.25.

Yield on 10-year U.S. bonds decreased to 3.38% and with 30-year maturities decreased to 4.17%.