While you were sleeping: BusinessWire weekend wrap

Monday 2nd February 2009

Stocks on Wall Street dropped on Friday, rounding out a record January slump as evidence piled up on the shrinking US economy and banks tumbled.

Citigroup led the Dow Jones Industrial Average lower, dropping about 9% to US$3.55 and bringing its six-month slide to 81%.

The world's biggest economy shrank at a 3.8% annual pave in the third quarter, Commerce Department figures on Friday showed. The contraction was smaller than expected, reflecting a build up of inventories.

Consumer spending, the biggest part of the US economy at about 70%, declined 3.5% in the final three months of 2008, having fallen 3.8% in the previous quarter. That's the first back-to-back slump of more than 3% since records began in 1947, according to Bloomberg.

Figures this week may show the US jobless rate climbed to a 16-year high of 7.5% last month as the economy shed more than 500,000 jobs. The US lost 2.6 million jobs last year and companies cut workers at a record pace in January.

The US dollar rose against the euro after the GDP report, rounding out is best month since October. The yen also strengthened against the euro after figures showed a weakening European jobs market and dissipating inflation, spurring demand for the relative haven of the greenback and Japan's currency.

The euro fell 1.2% to $1.2804 on Friday and was recently at $1.2789. It dropped 1.4% to 114.99 yen and was recently at 114.87. The greenback slipped 0.2% to 89.75 yen.

Crude oil rose in New York rose as the fourth-quarter contraction was less than the 5.5% pace economists had forecast. Crude oil for March delivery rose 0.6% to US$41.68 a barrel on the New York Mercantile Exchange.

Gold rose, rounding out its third monthly advance, as some investors favoured the precious metal as an alternative to cash.

Gold futures for April delivery rose 2.4% to US$928.40 an ounce on the New York Mercantile Exchange on Friday. Copper rose on Friday as commodities gained, pushing the Reuters/Jefferies CRB Index up 1.4%.

Copper futures for March delivery edged up 0.7% to US$ $1.4685 a pound on the New York Mercantile Exchange.

The Dow dropped 1.8% to 8000.86 on Friday, with Citigroup leading the index lower. Alcoa fell 7.7% to US$7.79 and Procter & Gamble slipped 6.4% to US$54.50. General Motors fell 5.4% to US$3.01 and General Electric declined 4.6% to US$12.13.

The Standard & Poor's 500 Index fell 2.3% to 825.88 and the Nasdaq Composite 2.1% fell 2.1% to 1476.42.

Amazon.com surged 18% to US$58.82, helping limits the Nasdaq's decline, after reporting better-than-expected sales and earnings. Fourth-quarter profit rose 8.7% to US$225 million while sales jumped 18% to US$6.7 billion as it benefited from strong holiday season sales and offered discounts on shipping.

President Barack Obama will probably tie further financial aid for banks to undertakings for increased lending to consumers and businesses, Barney Frank, chairman of the House Financial Services Committee, reportedly said. The previous Bush administration had erred in not imposing stricter conditions on lenders receiving federal government funds, he told the ABC's 'This Week' programme.

In Europe, the Dow Jones Stoxx 600 Index climbed 0.2% to 191.23 on Friday. Roche jumped 1.9% after turning hostile with its bid for US-based Genentech, cutting the value of the offer for the 44% it doesn't already own to reflect deteriorating market conditions.

BHP Billiton fell 7.5% amid speculation it is softening up investors for a weaker earnings report. Xstrata slipped 12% as commodity prices weakened during Europe's day.

In London, Xstrata led the FTSE 100 Index's 1% decline to 4149.64. Germany's DAX 30 dropped 2% to 4338.35 and France's CAC 40 fell 1.2% to 2973.92.

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