Wall Street closes lower despite early gains
January 26, 2010
Wall Street erased early gains Tuesday to eventually close slightly lower. The early rally was sparked by upbeat earnings reports from several companies including Apple and Travelers.
The Federal Reserve starts its two-day policy meeting with the decision to made on whether or not chairman Ben Bernanke's term will be renewed. Interest rates are expected remain at historic lows.
In economic news, the Consumer Confidence index increased from 53.6 in the previous month to a better than anticipated 55.9 in January. Forecasts were for the Conference Board’s index to decrease to 53.5.
Meanwhile, the S&P/Case-Shiller 20-city home price index slid a larger than expected 0.2% in November from October and was down 5.3% from a year ago.
The Dow Jones lost 2.57 points, or 0.03%, to 10,194.29, the S&P's 500 shed 4.61 points, or 0.42%, to 1,092.17 and the NASDAQ dipped 7.07 points, or 0.32%, to 2,203.73.
Financials led the slide. Wells Fargo, Citigroup and Goldman Sachs lost between 2.4% and 2.7%.
Travelers gained 2.7% after the property-casualty insurer beat quarterly earnings and revenue estimates.
Apple put on 1.4% after beating quarterly earnings and revenue estimates in its report released after the close Monday. The better than expected result was attributed to strong sales of iPhones and Macintosh computers.
The tech sector was mixed, with Microsoft up 0.6% and IBM down 0.3%.
Search engine Yahoo! added 0.8% ahead of the release of its fourth quarter earnings after the bell. The company reversed last year’s loss to report a profit and beat revenue estimates.
DuPont dipped 0.8% despite the chemical maker topping quarterly estimates and increasing its full-year earnings forecast.
Johnson & Johnson slid 0.7% after the company forecast full-year profit at the lower end of estimates.
Discretionary stocks were boosted by the consumer confidence data. Retailers Wal-Mart and Target rose 1.4% and 2.5%, while automaker Ford gained 1.5%.
COMEX gold for February delivery rose US$2.60 to settle at US$1,098.30 an ounce.
NYMEX light crude oil for February delivery fell US55c to settle at US$74.71 a barrel.
European Markets
European stocks closed higher for the first time in five sessions on the back of positive consumer sentiment data out of the US and better than expected German business confidence. Pharmaceuticals led gains, while miners dragged.
The UK benchmark FTSE 100 added 16.54, or 0.31% to 5,276.85, while French CAC40 gained 25.19, or 0.67% to 3,807.04. The German DAX rose 37.56, or 0.67% to 5,668.93.
Financials were mainly lower. In the UK Royal Bank of Scotland and Lloyds fell 1.6% and 2.3%.
Deutsche Bank slid 1.1%, while France’s BNP Paribas and Societe Generale advanced 2.1% and 1.1%.
H1N1 swine flu vaccine sales helped Novartis’s fourth-quarter profits increase 54%. The company’s shares put on 2.1%, while AstraZeneca, GlaxoSmithKline and Sanofi-Aventis added between 1.4% and 1.5%.
Siemens climbed 5.1% after cost cuts and a strong performance from its energy and healthcare businesses resulted in the engineering company reporting its highest quarterly profit in more than two years.
Semiconductor companies Infineon and STMicroelectronics gained 2% each after Texas Instruments forecast a continuation of strong sales seen in the last quarter.
Concerns about the Chinese economy and a fall in metals prices sent miners lower. Xstrata fell 1.7%, while Aussie peers BHP Billiton and Rio Tinto lost 1% and 1.1% respectively.
BG Group, which was up 1.5%, was the best performer on a positive day for energy majors.
Japanese Markets
Japan’s Nikkei slumped to its lowest close in five weeks as China continued to implement measures to slow its economic growth. As a result the yen rose, sending export stocks lower.
The Nikkei 225 dropped 187.41, or 1.78% to 10,325.28.
Hitachi Construction Machinery Co. sank 4.2% following a broker recommendation to sell the stock, citing a slowdown in construction activity in China. Komatsu lost 2.5%
Electronics makers Sony and Panasonic weakened 4.8% and 5.3%.
Heavyweight banks Mitsubishi UFJ Financial and Mizuho Financial Group lost 3.1% and 2.7%.
Shipping stocks struggled on concerns demand will diminish. Kawasaki Kisen Kaisha and Nippon Yusen K.K. fell 4.6% and 3.6%.
Sumitomo Metal Mining shed 3.5% on the back of a drop in commodity prices, while trading house Mitsui & Co dipped 2.6% due to commodities being its largest source of profit.
Mobile phone operator KDDI slumped 8.6% after agreeing to buy a 38% stake in Jupiter Telecommunications for US$4 billion. Jupiter shares fell 6% after a 14% jump the previous day.
Hong Kong Markets
The Hang Seng slumped again Tuesday, closing at their lowest level in four months. The market retreated on the back of weaker than expected earnings for key players on the market and the continuing shadow China’s lending restrictions has placed on the growth expectations.
The Hang Seng slumped 489.22, or 2.38% to 20,109.33.
Bank of China and heavyweight lender ICBC were both down 3.4%.
HSBC lost a more modest 0.2%.
Foxconn International, the world’s largest third party mobile phone maker, lost 8.7% after issuing a profit warning.
Li & Fung, which makes clothes for Wal-Mart and Australia’ bonds tacked on 0.2%.
Shoemaker Yue Yuen Holdings bucked the trend, rallying 3%.
The move triggered a broader sell-off, particularly in consumer electronic stocks.
China Oil & Gas Group slumped 19% after announcing a $100 million capital raising.
Resource stocks were mostly heavily sold as the price of commodities retreated and China’s restrictions on lending threatened growth.
Jiangxi Copper lost 7%, while offshore oil producer CNOOC lost 3.5%.
The Federal Reserve starts its two-day policy meeting with the decision to made on whether or not chairman Ben Bernanke's term will be renewed. Interest rates are expected remain at historic lows.
In economic news, the Consumer Confidence index increased from 53.6 in the previous month to a better than anticipated 55.9 in January. Forecasts were for the Conference Board’s index to decrease to 53.5.
Meanwhile, the S&P/Case-Shiller 20-city home price index slid a larger than expected 0.2% in November from October and was down 5.3% from a year ago.
The Dow Jones lost 2.57 points, or 0.03%, to 10,194.29, the S&P's 500 shed 4.61 points, or 0.42%, to 1,092.17 and the NASDAQ dipped 7.07 points, or 0.32%, to 2,203.73.
Financials led the slide. Wells Fargo, Citigroup and Goldman Sachs lost between 2.4% and 2.7%.
Travelers gained 2.7% after the property-casualty insurer beat quarterly earnings and revenue estimates.
Apple put on 1.4% after beating quarterly earnings and revenue estimates in its report released after the close Monday. The better than expected result was attributed to strong sales of iPhones and Macintosh computers.
The tech sector was mixed, with Microsoft up 0.6% and IBM down 0.3%.
Search engine Yahoo! added 0.8% ahead of the release of its fourth quarter earnings after the bell. The company reversed last year’s loss to report a profit and beat revenue estimates.
DuPont dipped 0.8% despite the chemical maker topping quarterly estimates and increasing its full-year earnings forecast.
Johnson & Johnson slid 0.7% after the company forecast full-year profit at the lower end of estimates.
Discretionary stocks were boosted by the consumer confidence data. Retailers Wal-Mart and Target rose 1.4% and 2.5%, while automaker Ford gained 1.5%.
COMEX gold for February delivery rose US$2.60 to settle at US$1,098.30 an ounce.
NYMEX light crude oil for February delivery fell US55c to settle at US$74.71 a barrel.
European Markets
European stocks closed higher for the first time in five sessions on the back of positive consumer sentiment data out of the US and better than expected German business confidence. Pharmaceuticals led gains, while miners dragged.
The UK benchmark FTSE 100 added 16.54, or 0.31% to 5,276.85, while French CAC40 gained 25.19, or 0.67% to 3,807.04. The German DAX rose 37.56, or 0.67% to 5,668.93.
Financials were mainly lower. In the UK Royal Bank of Scotland and Lloyds fell 1.6% and 2.3%.
Deutsche Bank slid 1.1%, while France’s BNP Paribas and Societe Generale advanced 2.1% and 1.1%.
H1N1 swine flu vaccine sales helped Novartis’s fourth-quarter profits increase 54%. The company’s shares put on 2.1%, while AstraZeneca, GlaxoSmithKline and Sanofi-Aventis added between 1.4% and 1.5%.
Siemens climbed 5.1% after cost cuts and a strong performance from its energy and healthcare businesses resulted in the engineering company reporting its highest quarterly profit in more than two years.
Semiconductor companies Infineon and STMicroelectronics gained 2% each after Texas Instruments forecast a continuation of strong sales seen in the last quarter.
Concerns about the Chinese economy and a fall in metals prices sent miners lower. Xstrata fell 1.7%, while Aussie peers BHP Billiton and Rio Tinto lost 1% and 1.1% respectively.
BG Group, which was up 1.5%, was the best performer on a positive day for energy majors.
Japanese Markets
Japan’s Nikkei slumped to its lowest close in five weeks as China continued to implement measures to slow its economic growth. As a result the yen rose, sending export stocks lower.
The Nikkei 225 dropped 187.41, or 1.78% to 10,325.28.
Hitachi Construction Machinery Co. sank 4.2% following a broker recommendation to sell the stock, citing a slowdown in construction activity in China. Komatsu lost 2.5%
Electronics makers Sony and Panasonic weakened 4.8% and 5.3%.
Heavyweight banks Mitsubishi UFJ Financial and Mizuho Financial Group lost 3.1% and 2.7%.
Shipping stocks struggled on concerns demand will diminish. Kawasaki Kisen Kaisha and Nippon Yusen K.K. fell 4.6% and 3.6%.
Sumitomo Metal Mining shed 3.5% on the back of a drop in commodity prices, while trading house Mitsui & Co dipped 2.6% due to commodities being its largest source of profit.
Mobile phone operator KDDI slumped 8.6% after agreeing to buy a 38% stake in Jupiter Telecommunications for US$4 billion. Jupiter shares fell 6% after a 14% jump the previous day.
Hong Kong Markets
The Hang Seng slumped again Tuesday, closing at their lowest level in four months. The market retreated on the back of weaker than expected earnings for key players on the market and the continuing shadow China’s lending restrictions has placed on the growth expectations.
The Hang Seng slumped 489.22, or 2.38% to 20,109.33.
Bank of China and heavyweight lender ICBC were both down 3.4%.
HSBC lost a more modest 0.2%.
Foxconn International, the world’s largest third party mobile phone maker, lost 8.7% after issuing a profit warning.
Li & Fung, which makes clothes for Wal-Mart and Australia’ bonds tacked on 0.2%.
Shoemaker Yue Yuen Holdings bucked the trend, rallying 3%.
The move triggered a broader sell-off, particularly in consumer electronic stocks.
China Oil & Gas Group slumped 19% after announcing a $100 million capital raising.
Resource stocks were mostly heavily sold as the price of commodities retreated and China’s restrictions on lending threatened growth.
Jiangxi Copper lost 7%, while offshore oil producer CNOOC lost 3.5%.
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