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Saturday, 30 August 2008

Wall Street hit by bad news

NEW YORK - WALL Street took a tumble on Friday as weak economic data and a disappointing earnings report from computer giant Dell weighed on the markets and Hurricane Gustav churned toward the Gulf of Mexico.

Low volume may have intensified the losses with trade thin ahead of a three-day Labour Day holiday in the United States, analysts said.

The Dow Jones Industrial Average slumped 171.22 points (1.46 per cent) to end at 11,543.96.

The tech-dominated Nasdaq composite tumbled 44.12 points (1.83 per cent) to 2,367.52 and the Standard & Poor's 500 broad-market index retreated 17.85 points (1.37 per cent) to 1,282.83.

The main indexes closed lower for the week but held onto gains for a strong August. The Dow rose 1.92 per cent, the Nasdaq 2.44 per cent and S&P index 1.78 per cent in the month.

Ahead of the open, the Commerce Department reported consumer spending rose 0.2 per cent in July from June, the weakest gain since February, while personal incomes slid 0.7 per cent, the steepest drop since August 2005.

Inflation was running at a 4.5 per cent annual pace, the steepest since February 1991.

'Investors turned sour toward the market after both consumer spending and personal spending showed declines in July, said Ms Colleen King at Schaeffer's Investment Research.

'Dell's less-than-stellar earnings report didn't help the situation. If that news wasn't enough, continued concern over (Hurricane) Gustav's eminent distress also weighed on investors' minds.'

Ms King said 'fears of Gustav turning into another Katrina' kept the markets on edge going into the weekend.

Oil surged in the early trade but gave back the gains. New York's main contract, light sweet crude for delivery in October, fell 13 cents to close at US$115.46 per barrel.

Dell reported profits short of most forecasts and warned of 'conservatism' in tech spending that appears to be spreading around the world.

Mr Chris Lafakis at Economy.com called the Dell report an 'ominous warning', that hurt the broader tech sector.

Dell shares sank 13.8 per cent to close at US$21.73 following its report.

Elsewhere in the sector, Marvell Technology fell 4.4 per cent to US$14.11 despite a sharp rise in profits for the semiconductor group. Google shed 2.2 per cent to US$463.29 and Cisco Systems lost 2.5 per cent to US$24.05.

Financial shares came under renewed pressure after several days of strong gains.

Fannie Mae slid 13.9 per cent to US$7.23 and sibling Freddie Mac tumbled 13.8 per cent to US$4.55 amid ongoing worries about the future of the government-sponsored, shareholder-owned mortgage finance firms.

Also in the financial space, investment bank Lehman Brothers managed a gain of 1.39 per cent to US$16.09 and Citigroup declined 0.47 per cent to US$18.99.

Bonds fell, with the yield on the 10-year US Treasury bond rising to 3.813 per cent from 3.795 per cent on Thursday and that on the 30-year bond increasing to 4.412 per cent against 4.389 per cent.

Bond yields and prices move in opposite directions. -- AFP

1 comment:

John's Arts & Crafts said...

Great Article!, but what I am finding out locally is the price of transportion fuel costs has raised the costs for everything with helps to keep money in people's pocktet instead of purchase of electronic's

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