While you were sleeping: Wall St extends slide; housing starts jump

Wednesday 17th June 2009

Stocks on Wall Street extended their slide after a drop in profit at Best Buy Co., the world’s biggest electronics chain, stoked concern consumer spending isn’t reviving quickly.

Best Buy fell 7.3% to US$35.84 after reporting a 15% drop in profit as demand waned, leading US retailer stocks lower. The S&P Consumer Discretionary Sector Index slipped 2.3%. Hi-fi products manufacturer Harman International Industries fell 12% to US$20.40, leading the consumer index lower.

The Dow Jones Industrial Average fell 1.3% to 8504.67 and the Standard & Poor’s 500 Index declined 1.3% to 911.97. The Nasdaq Composite fell 1.1% to 1796.18.

Freeport-McMoRan Copper & Gold fell 5% to 52.39 and aluminium producer Alcoa Inc. dropped 2.8% to US$10.90 as commodity prices slid.

Stocks also slid after New York University economist Nouriel Roubini told Reuters that the US economy won’t recover until the end of the year, and then only weakly.

Home improvement chain Home Depot fell 2.7% to US$23.20 after Commerce Department figures showed housing starts rose to a higher-than-expected annual rate of 532,000. Building permits rose 4% to 518,000, also exceeding expectations.

Industrial output fell 1.1%, according to the Federal Reserve. Wholesale prices fell 5% in the 12 months through May, according to the Labor Department. That was the biggest decline in about 50 years, according to Bloomberg.

Nucor Corp., the second-largest steel company in the US, rose 2.4% to US$46.86 after forecasting a smaller-than-expected second-quarter loss.

President Barack Obama called for major changes to financial regulation including a watchdog for financial products.

Obama is to release proposals to strengthen oversight of financial markets and banks this week, according to Bloomberg. The proposals are to include the creation of the Consumer Financial Protection Agency to oversee rules on lending, according to Reuters.

Koenigsegg, the Swedish producer of expensive sports cars, reached an agreement with General Motors to acquire its unprofitable Saab Automobile unit, a merger that will blend the tiny, specialist auto designer building 18 cars a year with the automaker that produces 93,000. The transaction is to include US$600 million of financing from European Investment Bank, guaranteed by the Swedish government, according to GM.

New car registrations in Europe dropped for a 13th month in May, according to industry association ACEA. Registrations fell 4.9% to 1.27 million vehicles last month.

The leaders of Brazil, Russia, India and China, known as the BRIC economies, called for greater control of the global financial system at their first summit.

"The emerging and developing economies must have a greater voice and representation in international financial institutions," the world’s biggest emerging economies said in their joint communiqué.

US Treasuries rose as stocks fell and the Federal Reserve purchased US$6.45 billion of three-year notes, an increase from its last purchase of US$6 billion on May 27.

The yield on the 10-year notes fell 6 basis points to 3.66% while 30-year yields fell seven basis points to 4.5%.

In Europe, stocks fell for a third straight day. The Dow Jones Stoxx 600 Index slipped 0.1% to 208.8, led by an 18% slump in TUI AG, the German travel agency owner, after Deutsche Bank resumed coverage of the group with a “sell” rating.

National Bank of Greece SA tumbled 11% after announcing plans for a 1.25 billion euro rights offer. UBS AG fell 4.1% after Moody’s Investors Service put the firm’s ratings on review for a possible downgrade.

Germany’s DAX 30 edged up 0.02% to 4890.72 after the ZEW Center for European Economic Research said its index of German investor and analyst expectations rose to 44.8 this month, the highest in three years and more than economists had predicted.

The UK’s FTSE 100 rose 0.1% to 4328.57 and France’s CAC 40 slipped 0.2% to 3213.95.

The US dollar fell against most major currencies after Russia questioned the greenback’s status as reserve currency and a pick-up in US housing starts lifted investors’ appetite for higher-yielding currencies. The dollar weakened 1.5% to 96.36 yen. The euro rose 0.4% to $1.3835, helped by the gain in the ZEW index and dipped 1.1% to 133.37 yen.

The ICE Futures' dollar index, which tracks the greenback against a basket of major currencies, fell 0.6% to 80.699.

Crude oil for July delivery slipped 0.3% to US$70.43 a barrel on the New York Mercantile Exchange.

Gold futures for August delivery rose 1.1% to US$938 an ounce in New York while copper edged up 0.4% to US$2.2945 a pound.

Businesswire.co.nz

Comments from our readers

No comments yet