Thursday, January 22, 2009

Stock selloff accelerates

Stocks tumbled Thursday morning as Microsoft's earnings disappointment and job cuts and more bad news on the housing sector overshadowed any enthusiasm about Apple's upbeat earnings.

The Dow Jones industrial average (INDU) fell 180 points or 2.3%, over an hour into the session after earlier shedding more than 200 points. The Standard & Poor's 500 (SPX) index tumbled 19 points or 2.3% and the Nasdaq composite (COMP) lost 45 points or 3.1%.

Stocks surged Wednesday on IBM's earnings and a bounce in some of the bank shares hit in the recent retreat. Investors also welcomed signs that Treasury Secretary nominee Tim Geithner is likely to be confirmed.

But the gains proved unsustainable Thursday as investors sorted through a mix of earnings and a pair of dour housing market reports.

Microsoft: The tech leader said it will cut up to 5,000 jobs over the next 18 months due to the impact of the recession. Microsoft (MSFT, Fortune 500) also reported lower fiscal second-quarter earnings that missed estimates on slightly higher revenue that also missed estimates.

Apple: The company reported higher fiscal first-quarter sales and earnings late Wednesday that topped estimates. Apple (AAPL, Fortune 500) also issued a fiscal second -quarter sales and earnings forecast that was short of analysts' estimates. But investors focused on the earnings and sent shares 7% higher Thursday morning.

Other company news: After the market close Wednesday, eBay (EBAY, Fortune 500) reported a lower fourth-quarter profit that nonetheless topped estimates. The online auctioneer also issued a current-quarter profit forecast that is short of expectations. Shares fell 11% Thursday.

Also late Wednesday, Intel (INTC, Fortune 500) said it was shutting sites in Asia and scaling back U.S. operations in a restructuring move that will affect up to 6,000 people. Shares fell 3.7%.

In other news, the chief executives of Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500) bought some of their companies' stock last week, according to separate SEC filings. However, the news failed to lift either stock Thursday, with BofA falling 12% and Citigroup falling 14%.

Economy: Housing starts and building permits both tumbled to record lows in December, the government reported. Permits fell 10.7% from November to an annual rate of 549,000 in December. Starts fell 15.5% from November to an annual rate of 550,000. The declines were worse than expected, according to a survey of economists.

A separate report showed that weekly claims for unemployment rose to a 26-year high last week, rising 62,000 from the previous week to 589,000. Economists from the

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.57% from 2.52% Wednesday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.

Lending rates tightened. The 3-month Libor rate increased to 1.16% from 1.12% Wednesday, according to Overnight Libor rose to 0.21% from 0.19% Wednesday. Libor is a bank-to-bank lending rate.

Other markets: The dollar fell against the euro and the yen.

U.S. light crude oil for March delivery fell $1.01 to $42.54 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $4.80 to $856.50 an ounce.

Gasoline prices rose two-tenths of a cent to a national average of $1.85 a gallon, according to a survey of credit-card swipes released Wednesday by motorist group AAA.

1 comment:

Blogger said...

eToro is the #1 forex trading platform for beginner and advanced traders.


Copyright 2007 All Right Reserved. shine-on design by Nurudin Jauhari. and Published on Free Templates