U.S. Indexes Drop 2.5%; CIT, Icahn Deal

Mukesh Buch
31 Oct, 2009
New York City

U.S. stocks indexes dropped more than 2.5% as person income and expenditure fell in September. The decline set off a sharp fall in indexes Canada, Europe and Latin America. Crude oil and precious metals declined. CIT Group plunged 24% as it prepares for a pre-packaged bankruptcy.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. stocks indexes dropped more than 2.5% as person income and expenditure fell in September. The decline set off a sharp fall in indexes Canada, Europe and Latin America. Crude oil and precious metals declined.[/R]

U.S. indexes dropped sharply after personal income and expenditure declined in September, talks of large write-off at Citigroup and a drop in consumer confidence index. CIT Group also plunged 24% after it agreed to enter into a pre-packaged bankruptcy deal an obtain $1 billion in line of credit from Icahn Capital LP as the troubled lender pursues additional funds.

Personal income decreased $0.1 billion, or less than 0.1%, and disposable personal income decreased $0.2 billion, or less than 0.1%, in September, according to the Bureau of Economic Analysis.

Harman International Industries led gainers in the S&P 500 index with a rise of 18.6%. 3PAR Inc second quarter loss narrows. Avnet, Inc first quarter beats analyst expectations. BMC Software, Inc second quarter earnings rise 35%. Las Vegas Sands surges on Hong Kong listing approval.

European markets declined on weak read on consumer confidence and a decline in U.S. consumer spending. French index closed 5% for the month and German index lost 4.6% in the month. Lufthansa loss shrank. Indesit Company SpA net profit rises despite a fall in sales.

UK stocks closed lower as commodities traded sideways. Forth Ports offered positive outlook. Rolls-Royce Group wins $720 million order from Virgin Air. Aerospace and defense contractor Meggitt Plc reiterated its annual outlook.

Japan unemployment increased to 5.3% in September and consumer prices declined 2.2% from a year ago in the month. Nikon Corp increased after it lifted its outlook. Takeda Pharmaceuticals after its first half income surged. Sumitomo Trust & Banking first half net fell 33%.

Stocks in Shanghai and Hong Kong surged on the back of a rally in New York and Europe. Markets in Asia closed higher. Stronger than expected earnings at banks bolstered the sentiment and loans surge. Vice Premier Li Keqiang said that the economy is expected to rise 8% in the current year.

Stocks in Mumbai traded lower. Bharti Airtel revenues and profit declined as the mobile telecom market matures and price competition escalates. RIL slips on fourth consecutive fall in quarterly profit. Unity Infraprojects gains on a new building contract.

Australian stocks tracked higher as the markets in Asia gained on the rise in New York and Europe. Macquarie Group first half net dropped 21% as write-offs related to bad loans surged to A$414 million. Sims Metal Management first half net plunged 77%.

North American Markets

Dow Jones Industrial Average fell 249.85 or 2.5% to a close of 9,712.73, S&P 500 Index fell 29.92 or 2.8% to 1,036.19, and Nasdaq Composite Index declined 52.44 or 2.5% to close at 2,045.11. Toronto TSX Composite Index decreased 164.47 or 1.5% to 10,910.75.

Of the stocks in S&P 500 index, 18 increased, 482 declined and none were unchanged.

Gannett Company led the decliners in the S&P 500 index with a loss of 10.5% followed by losses in New York Times of 9.3%, in Monster worldwide of 9.2%, in MBIA Inc of 8.8% and in CB Richard Ellis of 3.9%.

Harman International Industries led gainers in the S&P 500 index with a rise of 14% followed by gains in Eastman Kodak 8.1%, in Genworth Financial, Inc of 4.3% and in Estee Lauder of 3.3%.

South American Markets Indexes

Mexico Bolsa Index decreased 601.80 or 2.1% to 28,646.03 and Brazil Bovespa Stock Index surged 2,175.08 or 3.4% to 61,545.50.

Argentina Merval Index fell 4.1% and Chile Stock Market Select index declined 1.7% and Colombia IGBC General Index decreased 2.2% and Peru Lima General Index decreased 3.8%.

Europe Markets Review

In London FTSE 100 Index closed lower 93.17 or 1.81% to 5,044.55, in Paris CAC 40 Index decreased 106.33 or 2.86% to close at 3,607.69, in Frankfurt DAX index lower 172.49 or 3.09% to close at 5,414.96. In Zurich trading SMI decreased 65.51 or 1.03% to close at 6,285.76.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 143.64 or 1.45% to 10,034.74, Hang Seng index in Hong Kong increased 487.88 or 2.29% to 21,752.87, and CSI 300 index in China higher 33.32 or 1.03% to 3,280.37. ASX 200 index in Australia increased 68.50 or 1.50% to 4,643.20. The FTSE Bursa KL Composite index in Malaysia was higher 1.48 or 0.12% to 1,243.23.

The Kospi Index in South Korea decreased 5.16 or 0.33% to close at 1,580.69, SET index in Thailand closed lower 4.86 or 0.70% to 685.24. JSE Index in Indonesia increased 23.67 or 1.01% to 2,367.70. The Sensex index in India decreased 156.44 or 0.97% to 15,896.28.

Commodities, Metals, and Currencies

Crude oil decreased $2.89 to $76.98 a barrel for a front month contract, natural gas edged down 4 cents to $5.02 per mBtu and gasoline decreased 6.28 cents to 196.20 cents.

Soybean future closed down 10.50 cents to $9.76 a bushel. Wheat futures closed down 9.50 cents in Chicago trading to $4.94 a bushel. Sugar closed unchanged 22.81 cents.

Gold decreased $2.10 in New York trading to close at $1,045.00 per ounce, silver closed up $0.35 to $16.31 per ounce and copper for the front month delivery decreased 7.05 cent to $2.95 per pound.

Dollar edged up against euro to $1.472 and fell against the Japanese yen to 90.09.

Yield on 10-year U.S. bonds decreased to 3.38% and with 30-year maturities decreased to 4.23%.