26/07/07

The Dow Jones dropped 226.5 points to finish at 13,716.9, the S&P 500 sank 30.5 points to end at 1,511.05. The Nasdaq tumbled 50.72 points to close at 2,639.86.

Countrywide Financial Corporation fell 10.5% to close at $30.50 following a sharp decline in quarterly profits. The country's largest mortgage lender also cut its full year earnings outlook while the chief executive of the company gave a negative view of the state of the housing market in general.

American Express was lower after its quarterly results from Monday had shown an increase in write downs of bad loans. The credit card issuer ended 5.4% lower at $61.17.

A number of other Dow components finished lower including Texas Instruments, which had reported lower quarterly figures on Monday, ending 4.5% down at $36.46. DuPont had its worst day in nearly two years to, closing 6.3% lower at $49.90.

Apple slumped following comments from AT&T that it had activated far fewer iPhones during the first two days of availability than it had expected. Shares in the company slid 6.13% to $134.88, causing the biggest drag on the Nasdaq.

After the bell, Amazon.com reported quarterly earnings that topped expectations, pushing shares 5.7% higher to $36.46.

US light crude oil for September delivery dropped by almost 2% to $73.56 a barrel. This sent oil companies down, including Exxon Mobil which lost 2.8% to $90.84.

COMEX gold for August delivery added $3.30 to $684.80 an ounce.

Treasury prices rose, lowering the yield on the 10 year note to 4.91% from 4.95%.

The Nikkei fell 143.6 points this morning to close at 17,858.4. Toyota Motor Corp and Matsushita Electric Industrial Co led declines by companies that get large proportion of their earnings from the US market, aggravated further by a stronger yen. Nintendo provided a high point after announcing net income that had risen to a record 80.3 billion yen in the first quarter as the company's Wii game player widened its lead over Sony Corp's PlayStation 3.

The Hang Seng is currently 48.7 points lower at 23,424.2. HSBC led declines among companies with business in the US. Air China rose to a high after saying its first half profit may gain more than 20 fold this year. Cnooc fell in line with the price of oil.

London's leading shares lost 2% yesterday as weaker oil prices and fresh fears over the US economy rocked investors. The FTSE 100 Index plummeted through the 6,500 barrier, falling 125.7 points to 6498.7 - its lowest close since May.

Power station operator British Energy was the leading faller down 24p to 509p, with Drax also sustaining heavy losses, off 28p at 700.5p. The heavily weighted oil majors also dragged the market down, with BP off 11p at 590p, despite having delivered second-quarter profits at the top end of market expectations. Royal Dutch Shell, which will publish results on Thursday, fell 57p to 1970p.

Other companies on the back foot included platinum distribution group Johnson Matthey, with shares off more than 3% at 1746p - after a trading update which disappointed.

Consumer products group Reckitt Benckiser headed a shortened Footsie risers board, up 31p at 2748p, as investors bought into the firm ahead of earnings from the company today. Yell joined those on positive ground after a first-quarter update reassured the City over prospects in the United States, where the business has been squeezed by increased competition. The Yellow Pages firm said it was confident of tackling the threat, causing shares to finish 3.25p ahead at 472.5p.

Retailers were also under pressure, mainly from a gloomy 2008 earnings outlook from Sports Direct International, which highlighted "exceptionally difficult" trading conditions and said that earnings were set to see limited growth over the year ahead. Shares in Sports Direct fell nearly 23%, or 43p to 147p, in the FTSE 250. Back in the top flight, Home Retail Group declined 14.5p to 427.25p, Next fell 51p to 1867p and Kingfisher was down 5p at 217.5p.

Among the miners, Lonmin fell 145p at 3590p and Anglo American dipped 124p to 3133p. BHP Billiton was adrift 25p at 1492p despite giving a positive update. Business outsourcing firm Capita also failed to woo investors with its strong interims and the promise of a special dividend. Shares were off 4%, at 743p.

Shares in Friends Provident lost some of their strength a day after revealing talks with Resolution over a possible merger. The stock surged 8% yesterday on hopes of further bids but was today down more than 2%, or 4.5p at 196.5p.

Economics
US Existing Home Sales (Jun) 1500 BST/1000 EDT

Pending home sales have dropped by a combined 10.9% over the past three months, pointing to further declines in existing home sales. Other housing indicators have also looked weak, as the latest data on homebuilder optimism and building permits were softer than anticipated. Analysts expect existing home sales to fall to 5.8m.

US Beige Book 1900 BST/1400 EDT

This Beige Book includes information collected up to 16th July. A key question will be how retail sales are characterised in June, given that a number of companies reported good results, yet official June retail sales from the Census Bureau were disappointing. Overall, analysts expect to see more mixed signals coming from consumer spending, as well as continued pessimism on the housing market, given that NAHB housing index dropped to a new cycle low in July.

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