While you were sleeping: Wall St falls, gold hits new record, greenback weakens

Wednesday 14th October 2009

US stocks fell after Johnson & Johnson posted quarterly sales that missed estimates and high-profile analyst Meredith Whitney cut her rating on Goldman Sachs Group to ‘neutral.'

The Dow Jones Industrial Average fell 0.14% to 9871.44 and the Standard & Poor's 500 declined 0.28% to 1073.19. The Nasdaq Composite eased by 0.2% to 2319.5.

Johnson & Johnson fell led the Dow down, falling 2.5% to US$60.99 after the world's largest health-products company reported a 5.3% drop in sales to a lower-than-expected US$15.1 billion on disappointing revenue from drugs and heart stents. Per-share earnings beat estimates as the company cut costs and paid less tax.

Goldman Sachs fell 2.4% to US$185.61 after Whitney said she was "far less bullish" on banks and recommended investors take profits after the shares soared this year.

Bank of America declined 1.9% to US$17.68 after the biggest US lender agreed to waive its attorney-client privilege in protecting the names of those involved in the decision to acquire Merrill Lynch, which may indicate it is ready to settle with regulators.

Newmont Mining Co., the biggest US gold producer, rose 2.41% to $US47.59 as the price of gold reached a new record US$1,069.70 an ounce. Gold advanced as the US dollar fell, stoking demand for the precious metal as an alternative investment and speculation rose that the metal may benefit as central banks diversify away from the greenback.

Gold futures for December delivery gained 0.3% to US$1,061 on the New York Mercantile Exchange.

Crude oil rose to a seven-week high after the Organization of Petroleum Exporting Countries lifted its forecast for oil consumption in 2010 as reviving economies consumer more fuel.

Crude oil for November delivery rose 0.9% to US$73.91 a barrel in New York. The price of crude has soared by two-thirds this year.

OPEC estimates global oil consumption will rise by 700,000 barrels a day to 84.93 million barrels in 2010, amid rising demand from emerging markets.

Copper fell after Rio Tinto, the world's third-biggest mining company, said it is yet to see a recovery in demand in the U.S. and Europe.

Weaker stock markets also weighed on the metal used to make pipes and wire. Copper futures for December delivery fell 2.8% to US$2.778 a pound in New York.

The US dollar fell to the lowest level against the euro since before the collapse of Lehman Brothers in September 2008. The greenback fell to $1.4824 per euro from $1.4773 and earlier weakened to $1.4876, the lowest since August last year. The dollar traded at 89.86 yen from 89.82 yen. The euro rose to 133.15 yen from 132.72.

The Dollar Index, which measures the dollar against a basket of six major currencies, fell 0.2% to 75.96 and is near a 14-month low. US Treasuries rose as stocks fell and amid speculation the tepid pace of economic recovery will ensure the Federal Reserve keeps interest rates near zero for longer.

The yield on benchmark 10-year bonds fell 8 basis points to 3.31% and the yield on 30-year Treasuries fell 8 basis points to 4.19%. Fed Vice Chairman Donald Kohn told the National Association for Business Economics that the US economy would continue to produce well below its potential, keeping a lid on inflation.

German investor confidence unexpectedly fell this month, according to the ZEW Centre for European Economic Research. The ZEW index of investor and analyst expectations fell to 56 from 57.7 in September.

Germany's DAX 30 declined 1.2% to 5714.31, led by a 2.7% slide for Deutsche Borse and a 2.6% decline in chipmaker Infineon Technologies. Europe's Dow Jones Stoxx 600 fell about 1% to 241.94 after the ZEW report.

Lenders fell following the ratings downgrade for Goldman Sachs. Barclays Plc. fell 3.4% while Lloyds Banking Group Plc declined 2.1% on reports it may have to pay 2 billion pounds to exit UK's Asset Protection Scheme.

Among regional benchmarks, the UK's FTSE 100 fell 1.1% to 5154.15 and France's CAC 40 declined 1.2% to 3801.39.

Businesswire.co.nz

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