Weak Sentiment Drags American, European Stocks

Mukesh Buch
25 Sep, 2009
New York City

Weak durable goods orders and new home sales hovered the trading sentiment in stocks, bonds and commodities trading in New York. Industrial, retailers and resource stocks declined with GE, Alcoa, Wal-Mart and MasterCard leading the losers.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – Weak durable goods orders and new home sales hovered the trading sentiment in stocks, bonds and commodities trading. Industrial, retailers and resource stocks declined with GE, Alcoa, Wal-Mart and MasterCard leading the losers.[/R]

U.S. stocks closed down as weak durable goods orders and weaker than expected increase in home sales dragged trading sentiment. Markets opened lower and then gained after the release of confidence index but lost the momentum on weak new home sales data.

G-20 leaders are scheduled to conclude their two-day meeting today as leaders coordinate global economic stimulus and tighten banking rules. Fed Chairman Bernanke suggested that credit markets need the support of the Term Asset-Backed Securities Loan Facility that has financed millions of home loans and nearly 0.4 million small business loans.

August durable goods orders decreased 2.4% or $4 billion to $164.4 billion, second monthly decline in the last three months. Orders fell 4.8% in July. Excluding transportation orders edged slightly lower.

Durable goods orders fell 2.4%, second monthly decline in three months. The inventory rebuilding in the last six months had lifted hopes among investors that orders will keep increasing for the rest of the year. Research In Motion Limited plunges 15%.

Seasonally adjusted new home sales increased 0.7% to 429,000 but fell 3.4% from a year ago. The median sale price of new homes sold in the month was $195,200 and average price was $256,800 with 7.3 months of inventory.

Unilever agrees to acquire Sara Lee personal care business in Europe for €1.25 billion in cash. The purchase will increase the consumer goods company’s reach in mid-price products in Europe that generate higher margins but are stagnant.

Research In Motion declines after earnings disappointed some traders. KB Home fell on earnings. Airlines trade higher after UBS lift rating on AMR Corp. Terra Industries declare one-time cash dividend. Sara Lee increase of global body care division sale to Unilever.

Unilever Plc proposed to acquire Sara Lee global body care and European detergent business for €1.3 billion. Euromoney Institutional Investor Plc increased after it lifted its earnings outlook. Luminar Group fell after company said it will miss earnings outlook.

European stocks closed lower as investors prepare for the earnings season in two weeks. Club Med surges on media speculation of an impending buyout offer. EADS is looking for extra €800 million greener and faster planes. Groupe Flo increased after raised €20 million.

Stocks in Mumbai declined led by resource stocks and IT outsourcing companies. Jet Airways board approved $400 million offering. Dr Reddy’s Laboratories increased on higher volume. Swaraj Engines Ltd surged on stake exchange talks.

North American Markets

Dow Jones Industrial Average decreased 42.25 or 0.4% to a close of 9,665.19, S&P 500 Index fell 6.40 or 0.6% to 1,044.38, and Nasdaq Composite Index declined 16.69 or 0.8% to close at 2,090.92. Toronto TSX Composite Index dropped 73.37 or 0.6% to 11,212.39.

Of the stocks in S&P 500 index, 128 increased, 364 declined and 5 were unchanged.

KB Home led the decliners in the S&P 500 index with a loss of 8.5% followed by losses in Convergys Corp of 7.2%, in Cabot Oil & Gas of 6.5%, in Jabil Circuit, Inc of 5.3% and in Master Card Inc of 4.7%.

Intuitive Surgical led gainers in the S&P 500 index with a rise of 6.4% followed by gains in Sara Lee Corp 6.3%, in LSI Corp of 5.3%, in Sunoco Inc of 4% and in Starbucks Corp of 3.5%.

South American Markets Indexes

Mexico Bolsa Index increased 294.87 or 1.1% to 28,759.98 and Brazil Bovespa Stock Index added 309.45 or 0.5% to 60,355.73.

Argentina Merval Index closed up 0.5% and Chile Stock Market Select index increased 0.1%, Peru Lima General Index edged up 0.1% and Colombia IGBC General Index added 1.1%.

Europe Markets Review

In London FTSE 100 Index closed higher 2.93 or 0.06% to 5,082.20, in Paris CAC 40 Index decreased 19.22 or 0.51% to close at 3,739.14, in Frankfurt DAX index lower 23.80 or 0.42% to close at 5,581.41. In Zurich trading SMI decreased 38.53 or 0.61% to close at 6,236.91.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 278.24 or 2.64% to 10,265.98, Hang Seng index in Hong Kong decreased 26.33 or 0.13% to 21,024.40 and CSI 300 index in China lower 22.40 or 0.73% to 3,058.53. ASX 200 index in Australia increased 12.10 or 0.26% to 4,713.30. The FTSE Bursa KL Composite index in Malaysia was lower 0.67 or 0.06% to 1217.39.

The Kospi Index in South Korea decreased 2.40 or 0.14% to close at 1,691.48. SET index in Thailand closed lower 6.97 or 0.96% to 721.57. JSE Index in Indonesia decreased 24.32 or 0.98% to 2,444.58.The Sensex index in India decreased 88.43 or 0.53% to 16,693.00.

Commodities, Metals, and Currencies

Crude oil increased $0.18 to $66.07 a barrel for a front month contract, natural gas edged up 3 cents to $3.98 per mBtu and gasoline decreased 1.81 cents to 161.85 cents.

Wheat futures closed down 23.25 cents in Chicago trading to $4.49 a bushel. Sugar edged up 0.25 cents a pound to 23.17 cents. Soybean future closed up 6.50 cents to $9.26 a bushel.

Gold decreased $8.60 in New York trading to close at $990.30 per ounce, silver closed down $0.26 to $16.03 per ounce and copper for the front month delivery increased 2.70 cent to $2.73 per pound.

Dollar edged lower against euro to $1.4675 and closed lower against the Japanese yen to 89.75.

Yield on 10-year U.S. bonds decreased to 3.32% and with 30-year maturities decreased to 4.10%.