Daily Comments
USA: Friday’s euphoria fizzles out and the week kicks off on a downbeat note
31.08.2010 12:39:00 Natalya Malykh, Analyst, Global Markets (Finam)
On Monday, August 30, the US stock market posted heavy losses. Disappointing economic data failed to induce growth and keep the markets within Friday’s close. A report on US personal income and outlays was released yesterday featuring July data. Expenses increased 0.4% compared to the projected 0.3% rise, while personal income rose only 0.2% instead of the anticipated 0.3% uptick, which added to doubts about consumers’ strength.
A downturn was fueled by Barack Obama’s speech about stimulus measures which will most likely hinge on corporate tax rebates. His speech echoed those made by Bernanke and Geithner, but the market was disheartened by the absence of any specific proposals.
The blue-chip gauge Dow Jones Industrial Average Index fell 1.39% to 10,009.73, while the tech-heavy Nasdaq Index plunged 1.56% to 2,119.97. The broad-based S&P 500 Index eased 1.47% and settled at 1,048.92.
Light, sweet crude oil futures for October delivery sank 47 cents, or 0.6%, in NYMEX trading to USD 74.70/bbl. COMEX gold futures for December delivery advanced USD 1.30, or 0.1%, to USD 1,239.20/oz. Mining stocks moved south amid falling basic metals prices. US Steel retreated 4.11%, while Cliffs Natural Resources lost 1.97% of its market value. Oil&gas plays also traded in the bull market territory, with Exxon Mobil off 1.33%, Chevron and ConocoPhillips down 1.53% and 1.4%, respectively.
Among blue chips, only Hewlett-Packard managed to hold ground and closed with green on the screen, up 1.47%. The following companies proved to be yesterday’s top laggards: Home Depot (-2.61%), Intel (-2.23%), Cisco Systems (-2.35%), Bank of America (-2.53%) and American Express (-2.49%).
It should be noted that consumer-focused stocks underperformed the broader market on the back of poor macro data, with Polo Ralph Lauren losing 3.52% of its market value, Guess? dropping 1.28%, Estee Lauder down 2.87% and Nordstrom plunging 5.15%.
Financial stocks were also beleaguered, with the country’s biggest banks JPMorgan Chase & Co, Citigroup and Goldman Sachs posting more than a 2% drop. Stock prices of payment processing operators Visa and MasterCard retreated 2.20% and 1.89%, respectively.
The M&A market was rife with further activities aimed at an acquisition of US biotechnology firm Genzyme by French Sanofi-Aventis. After Genzyme declined the buyout offer of the French company, the latter is now mulling over a hostile takeover. The news drove Genzyme 3.38% higher.
