While you were sleeping: Monsanto forecast, Moody's U.S. rating

Thursday 28th May 2009

Monsanto Co., the world’s biggest producer of seeds, said its full-year profit will be at the low end of its forecast range because of rivalry for sales of herbicides.

Shares of Monsanto fell 6.3% to US$79.88, helping drive the Standard & Poor’s 500 down 1.9% to 893.06.

The manufacturer predicted annual earnings of US$4.49 a share, the low end of its US$4.40 to US$4.50 range. Third-quarter earnings, due next month, would be US$1.15 per share versus an average estimate of US$1.58 in a Reuters survey.

Shares on Wall Street also fell as bond yields climbed, stoking concern record sales of Treasuries will hamper the government’s efforts to drive down borrowing costs.

The Dow Jones Industrial Average fell 2.1% to 8300.02 and the Nasdaq Composite slipped 1.1% to 1731.08.

Wells Fargo fell 6.1% to US$2408 and U.S. Bancorp slipped 5.7% to US$17.93 after the Federal Deposit Insurance Corp. said the number of “problem” banks is at a 15-year.

The S&P Financial Sector index fell 2.7%. Bank of America dropped 0.6% to US$10.91, leading the Dow higher, after saying it was 76% toward its capital-raising goal, with almost US$26 billion in the kitty.

General Motors tumbled 20% to US$1.15, the biggest decline on the Dow, after failing to win sufficient support from bondholders for its stocks for debt swap.

U.S. home resales rose in March, as cheaper prices attracted buyers back into the market. Purchases of existing homes climbed 2.9% to an annual rate of 4.68 million, according to the National Association of Realtors. Still, the median house price fell 15%.

The world’s biggest economy will resume a growth path in the third quarter, according to the National Association for Business Economics survey. The survey showed the jobless rate is expected to be higher in the second half that economists were expecting in the February survey.

The U.S. economy will contract at an annual pace of 1.8% this quarter, before reviving to a 0.7% pace of growth in the third quarter and 1.8% in the fourth.

Consumer spending may decline 0.4% percent this year. That’s an improvement from the 1.3% drop forecast in the previous survey.

Moody’s Investors Service said America’s Aaa credit rating is ‘stable’ even as debt levels soar.

The rating is underpinned by “a diverse and resilient economy, strong government institutions, high per-capita income, and a central position in the global economy,” Moody’s said.

U.S. Treasury bonds fell on concern the market will suffer indigestion from record sales of debt, which amount to about US$720 billion so far this year. The Treasury sold US$35 billion of 5-year notes yesterday and is preparing to sell US$26 billion in 7-year notes tomorrow.

The yield on 10-year Treasuries jumped 14 basis points to 3.7%, a six-month high. Five-year notes rose 7 basis points to 4.57%.

Yields also climbed on bonds of mortgage finance companies Fannie Mae and Freddie Mac, stoking concern the Federal Reserve is losing traction in its efforts to drive down borrowing rates.

The yield on Fannie Mae’s 30-year fixed-rate mortgage bonds climbed above 4.5%, the highest since early December.

The U.S. dollar gained against the euro amid speculation the U.S. economy isn’t yet out of the woods, underpinning demand for the greenback as a haven.

The euro weakened 0.6% to $1.3899 and slipped 0.4% to 132.31 yen. The dollar rose 0.2% to 95.16 yen.

Copper fell as the U.S. dollar strengthened. Copper futures for July delivery slipped 0.9% to US$2.121 a pound on the New York Mercantile Exchange.

Gold futures for August delivery gained 0.5% to US$959.60 in New York.

Crude oil climbed above US$63 a barrel for the first time in six months after Saudi Arabian oil minister Ali al-Naimi predicted a recovery in prices back to US$75 a barrel and amid expectations an Energy Department report tomorrow will show shrinking inventories of gasoline.

Crude oil for July delivery climbed 1.6% to US$63.43 a barrel on the New York Mercantile Exchange.

Stocks in Europe rose for a third day, with the Dow Jones Stoxx 600 rising 0.7% to 210.41.

France’s CAC 40 climbed 0.8% to 3294.86 after figures from the statistics office Insee showed French manufacturers’ confidence rose for a second month in May.

The U.K.’s FTSE 100 edged up 0.1% to 4416.23 and Germany’s DAX 30 gained 0.3% to 5000.77.

Businesswire.co.nz

Comments from our readers

No comments yet