While you were sleeping: BusinessWire overnight wrap

Thursday 21st August 2008

Energy shares helped led Wall Street higher on Wednesday as the price of crude oil rose and a bullish outlook from Hewlett Packard buoyed optimism that tech companies might hold their own through the current economic slump.

The Standard & Poor's 500 Index increased 7.85 points, or 0.6%, to 1,274.54. The advance was limited by 22% drops in Fannie Mae and Freddie Mac on concern they needed a government bailout. The Dow average added 68.88, or 0.6%, to 11,417.43, and the Nasdaq Composite Index rose 4.72, or 0.2%, to 2,389.08.

Oil gained for a second straight day, settling up US45¢ at $US114.98 as concerns swirled about Russia's possible reaction to a US-Poland missile shield. Also, Goldman Sachs reiterated its year-end forecast of $US149 a barrel for US crude.

Energy shares wasted no time in moving higher. Devon, the biggest independent US oil producer, rose $US6.31, or 6.5%, to $US103.80. National Oilwell, a drilling equipment company, added $US4.74 to $US74.65. Chevron, the second-biggest oil producer, added $US1.75 to $US86.46.

HP shares rose more than 5%, their best daily gain in six months, after the computer maker said quarterly profit leaped by 14%, raising hopes that overseas demand would support technology spending even as the US economy slows.

Other tech stocks that rallied included iPod maker Apple Inc, up 1.3% to $US175.84, and Research In Motion Ltd, up 3.4% to $US130.28 after Citigroup reiterated its "buy" rating on stock of the BlackBerry maker.

The gains were offset in part amid increasing speculation about a federal government takeover of mortgage companies Fannie Mae and Freddie Mac.

Mortgage financiers

Shares of Fannie Mae, the biggest US provider of housing finance, plunged 26.8% to $US4.40, while Freddie shares fell 22.1% to $US3.25.

Fed Bank of Minneapolis president Gary Stern said it wasn't an "appropriate time" for the government to close Fannie and Freddie. Still, the central bank would monitor the exposure that banks have to preferred shares of the companies, Stern said in an interview with Bloomberg Television.

The euro traded at $US1.4745 at 6:06am in Tokyo, after decreasing 0.2% yesterday. It touched $US1.4631 on August 19, the lowest level since February 20, and reached the record high of $US1.6038 on July 15.

The euro was at 161.98 yen, after dropping 0.1%. It reached 160.87 on August 19, the lowest level in three months. The dollar was little changed at 109.84 yen.

The yield on 10-year notes fell 5 basis points, or 0.05 percentage point, to 3.80% at 4:56pm in New York, according to BGCantor Market Data. It touched 3.77%, the lowest since July 15. The 4% security due in August 2018 climbed 3/8, or $US3.75 per $US1,000 face amount, to 101 21/32.

The two-year note's yield dropped 5 basis points to 2.25%. It touched 2.22%, the lowest since May 12.

By Jonathan Underhill

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