S&P 500 Index Down 1.7%; Banks Weak

Mukesh Buch
27 Nov, 2009
New York City

U.S. stocks closed lower after Dubai worries plague world markets. Crude oil and god decline. UK banks with $50 billion of exposure may take larger than expected losses. Citigroup has the largest loan exposure of all American banks loans totaling $8 billion.

[R]4:30 PM New York, 9:30 PM London, 8:30 AM Sydney – U.S. stocks closed lower after Dubai worries plague world markets. Crude oil and god decline. UK banks with $50 billion of exposure may take larger than expected losses. Citigroup has the largest loan exposure of all American banks loans totaling $8 billion.[/R]

U.S stocks trade lower tracking losses in Asia and Europe. The three popular indexes the Dow, the S&P 500 and the Nasdaq lost more than 1.5%. Gold dropped 1% and crude oil declined 3%. Investors were rattled as Dubai reschedules $10 billion of debt and seek a better understanding of off-balance sheet debt.

Bank of America estimated that total debt of Dubai government owned companies could exceed $80 billion when off-balance sheet debt is calculated.

Banks in New York and Europe declined after investors worried that fast developing Dubai credit crunch may contribute to losses. Royal Bank of Scotland led a consortium of seventy bankers to fund most of the debt that fueled construction boom in Dubai.

UK stocks rebounded after early losses on the worries that Dubai debt rollover may presage a wider problem in the region. The banks in the UK and Europe dropped more than 5% after RBS confirmed that UK banks have $50 billion of loan exposure to UAE.

European markets closed higher and recovered from the earlier losses. Dubai loan losses and the worries that the debt reschedule may force rating revision of sovereign debt of Dubai, UAE. In trading, Volkswagen increased 6% on an upgrade and the company is targeting higher sales in Brazil.

North American Markets

Dow Jones Industrial Average decreased 154.48 or 1.5% to a close of 10,309.92, S&P 500 Index edged lower 19.14 or 1.7% to 1,091.49, and Nasdaq Composite Index declined 37.61 or 1.7% to close at 2,138.44. Toronto TSX Composite Index increased 27.61 or 0.2% to 11,464.41.

Of the stocks in S&P 500 index, 442 increased, 57 declined and 1 was unchanged.

The New York Times Company led the decliners in the S&P 500 index with a loss of 6.1% followed by losses in The NASDAQ OMX Group, Inc of 5.5%, in Pioneer Natural Resources Company of 5.1%, in CBS Corporation of 4.8% and in CONSOL Energy Inc of 4.7%.

South American Markets Indexes

Mexico Bolsa Index increased 327.62 or 1.1% to 30,775.45 and Brazil Bovespa Stock Index added 690.35 or 1.1% to 67,082.15.

Argentina Merval Index increased 1.5% and Chile Stock Market Select index added 1.2% and Colombia IGBC General Index increased 0.9% and in Peru Lima General Index decreased 0.2%.

Europe Markets Review

In London FTSE 100 Index closed higher 51.60 or 0.99% to 5,245.73, in Paris CAC 40 Index increased 42.22 or 1.15% to close at 3,721.45, in Frankfurt DAX index higher 71.44 or 1.27% to close at 5,685.61. In Zurich trading SMI increased 53.28 or 0.85% to close at 6,336.66.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 301.72 or 3.22% to 9,081.52, and Hang Seng index in Hong Kong decreased 1,075.91 or 4.84% to 21,134.50, and CSI 300 index in China lower 103.26 or 2.96% to 3,382.51. ASX 200 index in Australia decreased 136.50 or 2.90% to 4,572.10. Markets in Malaysia were closed today.

The Kospi Index in South Korea decreased 75.02 or 4.69% to close at 1,524.50. SET index in Thailand closed lower 5.36 or 0.78% to 680.37. The Sensex index in India decreased 222.92 or 1.32% to 16,632.01. The markets in Indonesia were closed today.

Commodities, Metals, and Currencies

Crude oil decreased $1.91 to $76.05 a barrel for a front month contract, natural gas edged increased 3 cents to $5.19 per mBtu and gasoline decreased 7.14 cents to 192.62 cents.

Soybean future closed down 1.50 cents to $10.53 a bushel. Wheat futures closed down 1.75 cents in Chicago trading to $5.69 a bushel. Sugar closed higher 0.45 cent 22.77 cents.

Gold decreased $13.10 in New York trading to close at $1,175.50 per ounce, silver closed down $0.46 to $18.33 per ounce and copper for the front month delivery decreased 7.15 cent to $3.12 per pound.

Dollar closed unchanged against euro to $1.498 and edged lower against the Japanese yen to 86.53.

Yield on 10-year U.S. bonds decreased to 3.21% and with 30-year maturities closed down at 4.20%.