While you were sleeping: Stocks fall on valuation concerns, dollar gains

Tuesday 22nd September 2009

Stocks on Wall Street fell from the highest levels in 11 months amid concerns the rally in equity markets has pushed valuations beyond levels justified by the earnings outlook. Oil tumbled more than 3%.

The Dow Jones Industrial Average fell 0.4% to 9778.86 and the Standard & Poor’s 500 declined 0.3% to 1064.66.

Shares on the S&P 500 were trading at almost 20 times reported earnings from continuing operations, the highest level since 2004, according to Bloomberg.

Bank of America dipped 2.2% to US$17.25 after the lender failed to meet a deadline for handing over details of its Merrill Lynch acquisition to a congressional investigative committee.

Exxon Mobil Corp. fell 0.6% to US$69.57 and Chevron declined 0.8% to US$72.05 as crude oil fell. Alcoa Inc. dropped 0.9% to US$13.94 as prices of metals fell.

Lennar Corp. declined 3.1% to US$16.02 after the homebuilder reported its loss doubled.

American International Group climbed 21% to US$48.40 after news that its rescue package will be eased under a proposal from the House Oversight and Government Reform Committee.

Wal-Mart Stores rose 1.6% to US$50.91 after HSBC Holdings rated the stock ‘overweight’ in new coverage.

The Nasdaq Composite Index rose 2.4% to 2138.04. Celgene Corp. climbed 5.1% to $55.20 after the shares were upgraded by Robert W. Baird. Perot Systems Corp. surged 65% to US$29.56 after Dell Inc. announced a US$3.9 billion takeover. Dell fell 4.1% to US$16.01.

Helping limit declines in US stocks, the Conference Board’s index of leading economic indicators rose for the fifth straight month in August. The measure of the economic outlook for the next six months rose 0.6% after gaining 0.9% in July.

Stocks fell in Europe, with the Dow Jones Stoxx 600 Index declining 0.8% to 242.97, with lenders leading the decline ahead of the Federal Reserve’s policy meeting and the summit of the Group of 20 nations.

Royal Bank of Scotland dropped 5.2% after Reuters reported it was talking to investors to gauge support for an equity placement of 3 billion to four billion pounds. Societe Generale fell 2.7% and Commerzbank declined 2.9%.

BHP Billiton fell 2.7% after the Wall Street Journal reported it would use part of an US$18 billion cash surplus to make acquisitions.

The US dollar rose after data showed US leading economic indicators gained in August and as stocks on Wall Street slipped, signaling risk appetite may be abating given the rally in equity markets in the past six months.

The dollar rose to 92.04 yen from 91.29 and advanced to $1.4676 per euro from $1.4712. The yen fell to 135.13 per euro from 134.33.

Copper rose after the gain in the index of US leading economic indicators.

Copper for December delivery edged up 0.7% to US$2.8055 a pound on the New York Mercantile Exchange.

US crude oil for October delivery fell 3.2% to US$69.71 a barrel amid speculation the price had run up ahead of demand.

Gold futures for December delivery fell 0.5% to $1,004.90 an ounce in New York.

Businesswire.co.nz

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