US stocks retreated yesterday following two days of strong gains in the face of some dire economic data. The Nasdaq had been driven higher earlier in the session on hopes that the tech sector had seen the worst of the economic news. But biotech stocks dragged the index into negative territory during the afternoon. On the broader market, declines were varied as investors bailed out of stocks after the recent rally, which has seen the S&P 500 climb about 20% since November 21st.
The Dow Jones dropped 242.85 points to close at 8,691.33, the S&P 500 fell 21.03 points to end at 888.67. The Nasdaq slid 24.4 points to finish at 1,547.34.
FedEx continued to fall after saying late on Monday that it has cut its 2009 outlook, despite lower oil prices. Shares tumbled 14.5%, while rival UPS lost 7%. Both stocks had been hindered further by a report from Fitch Ratings and JPMorgan Chase that said truckers will be hit hard in 2009 due to the recession.
Helping the Nasdaq rise in the morning was National Semiconductor Corp, even though the company had said during the previous session that it plans sharp cuts in manufacturing this quarter due to falling demand for personal mobile devices. Shares rallied 10%, while rival Texas Instruments rose 3.2% despite cutting its revenue forecast for the fourth quarter.
Procter & Gamble caused the biggest drag on the Dow after UBS cut its price target for the stock, sending shares 4.6% lower. 3M also weighed on the blue chip index after Citigroup and Credit Suisse cut their targets on the stock. The diversified manufacturer slid 3% as a result.
US light crude oil for January delivery lost $1.64 to $42.07 a barrel. COMEX gold for February delivery gained $4.90 to settle at $774.20 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 2.63% from 2.74%.
The Nikkei climbed 264.37 points to close at 8,660.24. Real estate and shipping companies led the charge on expectations the government will extend aid to developers and cargo fees for commodities climbed.
The Hang Seng jumped 824.52 points to 15,577.74 this morning. Investors were cheered by speculation that China's central bank will reduce interest rates as inflation slows, and after the nation's financial regulator said it has allowed banks to lend funds for mergers and acquisitions.
The FTSE 100 is currently 25.76 points lower at 4,355.50. Rio Tinto tops the risers board following news of big job cuts and a slash in capital spending. Shares surged 10.7% higher, with a number of rivals following in its wake. Xstrata climbs 5.9%, Vedanta gains 4.8% and Kazakhmys adds 4.1%. Economics
UK Wholesale inventories (Oct) 15.00 gmt
Wholesale inventories are expected to rise 0.1 percent with another decline in petroleum inventories (reflecting lower prices). Meanwhile, auto production cutbacks could begin to reduce the level of inventories, as both manufacturers and wholesalers adjust to slowing sales.
US Monthly budget statement (Nov) 19.00 gmt
Capital purchases under the Troubled Assets Relief Programme totalled about USD 37bn in November, adding to the Treasury's estimate of the budget deficit. Based on debt and cash balances, a deficit of USD206bn in November is expected. Excluding the TARP purchases, the deficit could be around USD170bn.v
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