US stocks slumped again yesterday as weak economic data continued to flow, deepening fears of a prolonged recession. The S&P 500 has now had more than a decade of gains erased from its value as levels hit those not seen since 1997.
New unemployment data showed that the number of Americans filing for new claims last week rose to 542,000, the highest level in 16 years. Furthermore, the November Philadelphia Fed Index, a regional reading on manufacturing, slipped to -39.3 against expectations of a rise to -35.
The Dow Jones dropped 444.99 points to close at 7,552.29, the S&P 500 sank 54.14 points to end at 752.44. The Nasdaq tumbled 70.30 points to finish at 1,316.12.
Banks were again amongst the worst hit, including Citigroup which plummeted 26.4%. There is concern that the troubled bank does not have enough capital to withstand billions of dollars of additional loan losses. Although the company's largest shareholder, Saudi Prince Alwaleed Bin Talal said on Thursday that he is increasing his stake in the company from 4% to 5%. JPMorgan Chase & Co caused the second heaviest weight on the Dow, falling 17.9%.
Oil companies suffered after the price of crude fell below $50 a barrel. Chevron Corp slid 8.8% while Exxon Mobil lost 7.7% and S&P index of energy companies fell 11.2%.
General Motors and Ford Motor Co managed gains after the Senate called off a vote on a proposed $25 billion bailout package due to lack of support. Instead, Democratic leaders said car manufacturers must submit a plan by 2nd December that shows how the money will enable them to turn around their business. The Senate will then re-discuss the possibility of a rescue. GM added 3.2%, while Ford jumped 10.3%
After the bell, Dell Inc pleased investors with better than expected profit as cost cuts tempered lower revenue. Shares climbed 6.3%. Fannie Mae and Freddie Mac also gave some positive news, saying they would suspend foreclosures of occupied homes until early 2009. This is the biggest move to date by the government to prevent the wave of evictions and home losses.
US light crude oil for December delivery dropped $4.77 to $49.62 a barrel. COMEX gold for December delivery gained $12.70 to $748.70 an ounce. Treasury prices jumped, lowering the yield on the 10 year note to 3.14% - a five year low.
The Nikkei rose 207.75 points to close at 7,910.79 this morning. Bargain hunters lifted the market after stocks dropped in the morning, trading near the lowest levels seen for three decades. Financials were lifted by a newspaper report that suggested Citigroup Inc may merge with a rival, helping to shore up the financial system. Mitsui Financial Group added 8.4% on the news.
The Hang Seng jumped 360.64 points to close at 12,659.2 this morning. Stocks rose, particularly financials, after the city's monetary authority said China branches of the city's banks can receive liquidity from the mainland's central bank. HSBC Holdings, which operates 76 outlets in China, added 1.9%, while BOC Hong Kong gained 7.8%.
The FTSE 100 is currently 24.4 points higher at 3,899.39 this morning having fallen almost 50 points at the open. Miners top the risers board with Xstrata up 9.5%, Antofagasta gaining 8.8% and Kazakhmys climbing 7.2%. TUI Travel tops the fallers board, losing 2.8%.
Economics
There is no major economic news today.
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