Stocks drop as deadlock continues in Greece - Jamestown Sun Stocks drop as deadlock continues in Greece - Jamestown Sun

Tuesday, May 15, 2012

Stocks drop as deadlock continues in Greece - Jamestown Sun

NEW YORK — A political stalemate in Greece rattled financial markets worldwide on Monday, driving U.S. stocks lower.

The euro sank to a three-month low against the dollar and borrowing costs for Spain and Italy jumped as bond traders anticipated that financial stress could spread far beyond Greece. Investors dumped risky assets and plowed into the safety of the Treasury market, pushing yields to their lowest levels this year.

The Dow Jones industrial average dropped 125.25 points to close at 12,695.35. The Dow has lost more than half of its gains for the year in the past two weeks as worries resurface about Europe and the strength of the U.S. economy.

In Athens, talks between political parties to form a government dragged into a second week. The uncertainty has raised concerns that Greece could miss a debt payment and drop the euro currency. The worry is that if Greece leaves the currency union, bond traders may demand steeper borrowing rates from other troubled countries and push them deeper into debt.

The turmoil could easily spread to the U.S. through the banking system. “The large banks are globally connected,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. “The concrete fear is that if Greece exits the euro, that would hurt European banks. They’ll pull back lending to U.S. banks and then they’d be in worse shape.”

In other trading, the Standard & Poor’s 500 index dropped 15.04 points to 1,338.35. The Nasdaq composite sank 31.24 points to 2,902.58.

The losses swept across the market. All 10 of the industry groups within the S&P 500 fell.

JPMorgan Chase’s $2 billion trading loss continued to hang over bank stocks. JPMorgan dropped 3 percent following news that the executive overseeing its trading strategy would step down. Morgan Stanley and Citigroup, two banks with large trading operations, sank more than 4 percent.

The loss to JPMorgan appears “manageable,” said Matt Freund, a portfolio manager at USAA Investments. “But people are looking at other banks and wondering who’s going to be next? What else could be lurking?”

Major markets in Europe plunged. France’s CAC-40 and Germany’s DAX lost 2 percent. Benchmark indexes fell nearly 3 percent in Italy and Spain.

Traders shifted money into the safest of government bonds, pushing Treasury prices up and their yields down. The yield on the 10-year note hit a low for the year, 1.77 percent.

Since hitting its high for the year on May 1, the Dow has been on a steady slide, closing lower on seven of the previous eight trading days. The Dow’s 1.7 percent loss last week was its worst since Dec. 16.

Despite the broad market decline, some stocks posted gains:

— Chesapeake Energy Corp. jumped 4 percent on reports that the investor Carl Icahn bought a stake in the natural gas company. Chesapeake’s CEO said he’d welcome an investment by Icahn, who is known for shaking up companies.

— Yahoo gained 2 percent. The company replaced its CEO, Scott Thompson. Yahoo reportedly pushed Thompson out for padding his resume.

— Electronics retailer Best Buy Co. rose 1 percent after the company’s founder, Richard Schulze, said he would step down as chairman. An investigation found that he knew the CEO was having a relationship with a female employee and didn’t tell an audit committee.

Tags: us businessbusiness

Durham NEWS

SENSEX 16328.25 112.41 (0.69%) NIFTY 4942.80 35.00 (0.71%) FTSE (May 15) 5459.33 -6.19 -0.11% DAX (May 15) 6463.74 11.77 0.18% CAC (May 15) 3072.87 14.88 0.49%

Brent Crude (May 15) $ 112.18 0.61 0.55% Gold (May 15) 28,142.00 -102.00 -0.36% Silver (May 15) 53,400.00 -235.00 -0.44%

Dollar / Rupee 53.79 -0.17 -0.32% Euro / Rupee 69.12 -0.03 -0.04%

BSE benchmark Sensex today bounced back from its 4-month lows and closed 112.41 points higher led by capital goods, metal and IT stocks after higher trends in European markets, snapping a five-day losing streak.

The 30-share Sensex, which had lost nearly 700 points in last five sessions, gained 112.41 points, or 0.69 per cent to 16,328.25 after touching the day's high of 16,370.12.

Similarly, the broad-based National Stock Exchange index rose by 35 points, or 0.71 per cent to 4,942.80.The BSE Sensex and NSE Nifty snapped five-day losing streak on Tuesday, gaining 0.7% each on the back of stabilisation in European markets and Indian rupee. Index heavyweights L&T, ICICI Bank, Infosys and State Bank of India led the up move.

After falling 700 points or 4% in previous five sessions, the BSE benchmark rose 112.41 points or 0.69%, to close at 16,328.25. The NSE benchmark went up 0.71% or 35 points to 4,942.80.

France's CAC, Germany's DAX and Britain's FTSE were up 0.3-1% after better than expected German gross domestic product data, though Greece woes still persist. Germany's GDP rose 0.5% QoQ and 1.2% YoY in first quarter of 2012.

Italy GDP declined by 0.8% QoQ while French and Euro zone GDP remained flat at 0.00%. Mecklai report says the data released today helped allay fears of recession in the 17- member area, which majority of market participants had expected prior to the release of these reports.

The Indian rupee gained quite sharply after hitting an intraday low of 54.15 initially. Reports suggest that selling dollars by public sector banks helped the rupee gain. It appreciated by 23 paise to 53.73 a dollar as against previous close of 53.97 a dollar.

Top lenders State Bank of India and ICICI Bank were up 1% and 2%, respectively. Infosys, India's No. 2 software services exporter surged over 3%.

Larsen & Toubro, India's largest engineering and construction company by sales shot up 5.41% after the company strongly said its topline and order inflow would grow 15-20% in FY13.

Healthcare stocks too participated in today's rally. Sun Pharma shot up over 3% and Cipla gained more than 1%.

Among metal stocks, Sterlite Industries, Tata Steel, Jindal Steel, SAIL and Hindalco climbed 2-3% while Sesa Goa rose 5%.

Two-wheeler majors too witnessed buying interest - Hero Motocorp went up 2.65% and Bajaj Auto gained 1.6%. Realty major DLF jumped 2.5%.

However, shares of top telecom operator Bharti Airtel fell as much as 5% intraday, before closing 1.3% down. Enforcement Directorate is probing money laundering case against the company. Bharti said it maintained highest standards of corporate governance and had always complied with all necessary norms.

Among other largecaps, ITC, NTPC, Maruti and GAIL were down 1-3%; HDFC Bank and ONGC were moderately lower.

In the second line shares, India Infoline and Gammon India rallied 10% and 16%, respectively after better than expected results for Q4FY12.

Fertiliser stocks spiked after Fertiliser Ministry approved 10% hike in urea prices, though these stocks mildly came off day's high after fertiliser secretary says any hike in urea price has to be cleared by cabinet. There is no change in urea prices as of now, he says.

Chambal Fertiliser, FACT, Madras Fertiliser, Mangalore Chemical, NFL, RCF and Zuari Industries moved up 4-9%.

Geometric shot up 15.4% after Rakesh Jhunjhunwala bought 10 lakh shares of the company yesterday.

Orchid Chemical was down nearly 8% today and fell 13% yesterday after disappointing set of numbers in Q4FY13.

The market breadth was neutral while the BSE Midcap and Smallcap indices gained 0.3-0.6%.

Durham NEWS

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