While you were sleeping: Stocks fall on doubts about global recovery's pace

Friday 2nd October 2009

Stocks fell in the US and Europe as figures showed American manufacturing grew less than expected and more people filed claims for unemployment benefits, stoking concern economic recovery will be slow.

The Institute for Supply Management’s factory gauge fell to 52.6 last month from 52.9 in August, on a scale where a reading over 50 indicates expansion.

Jobless claims rose to 551,000 last week, according to the Labor Department. The claims report comes before figures on Friday in the US that may show the unemployment rate rose to 9.8% in September as the economy shed 175,000 jobs.

US consumer spending was the bright spot, gaining the most in August since 2001, according to the Commerce Department. Purchases rose 1.3%.

The Dow Jones Industrial Average fell 1.9% to 9528.03 and the Standard & Poor’s 500 dropped 2.4% to 1032.07. The Nasdaq Composite fell 2.8% to 2062.51.

DuPont dropped 4.1% to US$30.81, JPMorgan Chase fell 5% to US$41.65 and Boeing fell 3.4% to US$52.32, pacing the slide in the Dow.

Microsoft Corp. fell 3% to US$24.94 after the stock was dropped from Goldman Sachs Group’s “conviction buy” list.

Comcast Corp. fell 6.7% to US$15.75 after Bloomberg reported that the largest US cable network is in talks with General Electric to buy a stake in NBC Universal.

UAL Corp., the parent of United Airlines, slumped 19% to US$7.48 after announcing plans to sell at least 19 million shares and US$175 million of convertible bonds.

Ford Motor Co. fell 2.5% to US$7.03 after reporting a 5.1% decline in September sales, as the federal government’s ‘cash-for-clunkers’ programme ended. General Motors’ sales tumbled 45%.

In Europe, the Dow Jones Stoxx 600 fell 1.6% to 238.62 led by banks and miners, after the weaker than expected US manufacturing report cast doubt on the pace of global recovery.

BHP Billiton, the world’s biggest mining company, fell 3.8% as prices of metals dropped. Rio Tinto fell 3.5%. Xstrata declined 5.5%.

Royal Bank of Scotland fell 4.5%, Deutsche Bank fell 2.8% and BNP Paribas declined 3.8%.

BAE Systems fell 4.4% amid concern Europe’s biggest arms manufacturer faces bribery charges. The UK Serious Fraud Office will ask the Attorney General for permission to take the company to court amid allegations it paid bribes to win contracts in Africa and Eastern Europe.

Among regional benchmarks, the UK’s FTSE 100 fell 1.7% to 5047.81, France’s CAC 40 declined 2% to 3720.77 and Germany’s DAX 30 slipped 2% to 5554.55.

Copper had the biggest decline in a week as the US dollar strengthened and doubts grew about the pace of global demand.

Copper futures for December delivery fell 2.9% to US$2.737 a pound on the New York Mercantile Exchange.

Crude oil fell on speculation demand for fuel may slow. Crude for November delivery slide 1.1% to US$69.83 a barrel on the New York Mercantile Exchange.

US gold for December delivery fell US$5.40 to US$1,004.00 as the greenback strengthened, reducing demand for the precious metal as an alternative investment.

The US Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.7% to 77.22 after the manufacturing and jobs data drove stocks lower.

The euro fell 0.7% to US$1.4533 and weakened 0.7% to 130.41 yen. Japan’s currency was little changed at 89.72 per dollar.

US Treasuries rallied after the weaker-than-expected economic data weighed on stocks. The yield on the benchmark 10-year notes fell 10 basis points to 3.2% and the yield on 30-year Treasuries slipped 8 basis points to 3.97%.

Businesswire.co.nz

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