S&P 500, Nasdaq Drop 1.2%; Problem Banks Rise

123jump.com Staff
23 Feb, 2010
New York City

U.S. indexes declined more than 1% and European markets dropped more than 1.4%. Commodities declined. FDIC said that the number of problem banks increased 27% at the end of fourth quarter and is likely to increase in 2010. Consumer confidence index declined to 10-month low.

[R]4:00 PM New York, 9:00 PM London, 8:00 AM Sydney – U.S. indexes declined more than 1% and European markets dropped more than 1.4%. Commodities declined. FDIC said that the number of problem banks increased 27% at the end of fourth quarter and is likely to increase in 2010. Consumer confidence index declined to 10-month low.[/R]

U.S. stocks and commodities declined after a weakness in consumer confidence and the number of problem banks increased. European indexes dropped 1.4% and Asian markets were mixed in overnight trading.

The Federal Deposit Insurance Corp, the U.S. government agency that insures bank deposits in its quarterly report said “problem” banks at the end of fourth quarter have increased 27% to 702 banks with $402.8 billion in assets from 552 banks with $345.9 billion in assets

The insurance fund deficit increased to $20.9 billion at the end of the fourth quarter from $8.2 billion in the third quarter.

FDIC Chairman Sheila Bair said at a news conference that problem “banks and banks failures tend to lag behind economic recovery” indicating more banks are likely to suffer.

For 2009 net income in the banking industry was $12.5 billion compared to $4.5 billion in 2008 and $100 billion in 2007. In the latest quarter ending in December banks swung to $914 million profit compared to loss of $38 billion in the quarter a year ago.

The deposit insurance agency insures 8,012 banks with $13.1 trillion in assets.

Home Depot increased on positive outlook and better than expected earnings. Cracker Barrel surged 8% after quarterly earnings increased 38%. Expeditors International soared 7% after quarterly net declined less than expected.

European air travel is in disarray as airlines cut flights at Frankfurt and Paris airports. British Air is bracing for cabin crew strike that may begin as early as mid-March.

European market indexes and the euro traded lower. Commerzbank dropped 7% on higher than expected charges. Carlsberg A/S soared after it targeted higher operating margins. Lufthansa pilots return following court orders. Raiffeisen International dropped 12%.

UK stocks decline on a weakness of resource stocks and commodities. British Airways cabin crew voted for a strike if talks with management fail. Minerva Plc reported its first profit in two years on higher valuation of properties. Wolseley Plc surged 12% on estimated earnings estimate.

Stocks in Tokyo trading edged lower. Resource stocks, commodities and export sensitive stocks closed lower. The yen edged higher. Shipping companies led the gainers. Convenience stores sales tumble 5% to 565.2 billion in January. Ad spending falls the most since 1947 in Japan.

Australian dollar traded at a ten-year high against the euro and strengthened against the yen and the U.S. dollar. Aristocrat Leisure reported a full year loss of A$157.8 million. Amcor net soars increase 2.3% in the first half.

North American Markets

Dow Jones Industrial Average declined 100.97 or 1% to a close of 10,282.41, S&P 500 Index edged lower 13.41 or 1.2% to 1,094.60, and Nasdaq Composite Index decreased 28.59 or 1.3% to close at 2,213.44. Toronto TSX Composite Index decreased 109.64 or 0.6% to 11,525.11.

Latin American Markets Indexes

Mexico Bolsa Index decreased 184.10 to 31,850.24 and Brazil Bovespa Stock Index fell 1,119.58 or 1.7% to 66,064.58.

Europe Markets Review

In London FTSE 100 Index closed lower 36.98 or 0.69% to 5,315.09, in Paris CAC 40 Index decreased 49.64 or 1.32% to close at 3,707.06, in Frankfurt DAX index lower 84.37 or 1.48% to close at 5,604.07. In Zurich trading SMI decreased 38.32 or 0.57% to close at 6,649.09.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 48.37 or 0.47% to 10,352.10, and Hang Seng index in Hong Kong increased 245.73 or 1.21% to 20,623.00, and CSI 300 index in China lower 34.71 or 1.07% to 3,198.63. ASX 200 index in Australia increased 0.80 or 0.02% to 4,718.30. The FTSE Bursa KL Composite index in Malaysia was lower 0.01 or 0.00% to 1,266.43.

The Kospi Index in South Korea increased 1.80 or 0.11% to close at 1,628.90. SET index in Thailand closed higher 9.78 or 1.39% to 715.58. JSE Index in Indonesia increased 19.39 or 0.76% to 2,583.65. The Sensex index in India increased 49.27 or 0.30% to 16,286.32.

Commodities, Metals, and Currencies

Crude oil decreased $1.58 to $78.73 a barrel for a front month contract, natural gas edged up 3 cents to $4.93 per mBtu and gasoline decreased 4.80 cents to 206.76 cents.

Soybean future closed down 9.50 cents to $9.59 a bushel. Wheat futures declined 9.50 cents in Chicago trading to $5.05 a bushel. Sugar closed down 0.44 cents at 23.68 cents per pound.

Gold decreased $10.00 in New York trading to close at $1,103.10 per ounce, silver closed up $0.39 to $15.85 per ounce and copper for the front month delivery decreased 9.95 cent to $3.22 per pound.

Dollar edged up against euro to $1.3504 and edged lower against the Japanese yen to 90.22.

Yield on 10-year U.S. bonds closed down to 3.68% and with 30-year maturities closed lower at 4.63%.