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BusinessWire overnight wrap: 20 Nov 08

While you were sleeping: BusinessWire overnight wrap

Nov. 20 – Stocks on Wall Street fell, sending the Standard & Poor’s 500 Index to a five-year low, on concern about delays to a bailout for automakers and further signs the world’s biggest economy is sliding into a deep recession.

The S&P 500 fell 2.8% to 834.38 and the Dow Jones Industrial Average declined 2.1% to 8258.13. The Nasdaq Composite fell 3% to 1436.96.

Citigroup dropped 17% to a 13-year low of US$6.95 after saying it would buy US$17.4 billion of assets from related structured investment vehicles. Alcoa declined 9.4% to US$8.59 and General Electric dropped 7.7% to US$14.81.

General Motors slid 14% to US$2.65.

Mitch McConnell, the Senate Republican leader, is pushing lawmakers to speed the passage of $25 billion in loans to the auto industry. Others, including Pennsylvania Democrat Paul Kanjorski oppose a rescue for automakers such as GM, which has said it may run out of operating cash this year.

Ford, GM and Chrysler “must either adapt to survive or face extinction,” Kanjorski said.

Chrysler chief executive Robert Nardelli said the automaker did consider bankruptcy as an option before turning to the federal government for aid to survive.

Minutes of last month’s meeting of Federal Reserve policy makers show they expected the U.S. economy to contract through until mid-2009 and some had called for additional cuts to the target interest rate.

U.S. consumer prices plunged by the most on record last month while housing starts sunk by a record amount, providing further evidence the economy may slide into a deep recession.

The consumer price index fell 1% in October, raising the prospect of a bout of deflation, while housing starts fell to an annual rate of 791,000.

In a sign that fear is rising about corporate defaults, yields on speculative-grade corporate bonds rose to more than 20%, the first time they’ve reached that level in at least two decades, according to Bloomberg.

Longer-dated U.S. Treasury bonds advanced after government figures showed a slump in consumer prices. Bonds tend to rally when consumer prices fall because inflation eats into their fixed payments.

The yield on 10-year Treasuries fell 14 basis points to 3.39%. The 30-year bonds declined 14 basis points 3.98%.

The yen rose against the U.S. dollar and the euro as the decline in stocks spurred speculation investors will reduce holdings of higher-yielding assets funded with loans in Japan’s currency. The yen strengthened to 96.36 against the dollar from 97.03. It gained to 121.39 per euro from 122.43. The euro fell to $1.2593 from $1.2618.

The European Commission is developing a proposal for a 130 billion euro financial package to lift the region’s economy, according to the office of German Economy Minister Michael Glos.

Stocks fell in Europe, with the Dow Jones Stoxx 600 Index sliding to a five-year low amid concern the global economic slump will erode demand and corporate profits.

BASF, the world's largest chemical company, dropped 14% on Germany’s DAX 30 after saying it won’t meet its profit target. Deutsche Bank fell 8.8% and BMW declined 13%. The DAX 30 fell 4.9% to 4354.09.

In France, the CAC 40 fell 4% to 3087.89, paced by an 11% decline in BNP Paribas and an 11% drop in Alcatel-Lucent.

Oil producers and miners fell in the U.K. on expectations the global recession will spa demand for oil and metals. U.K. stocks declined as investors speculated the global recession is worsening and oil and metals prices slid. Royal Dutch Shell and Rio Tinto declined.

AstraZeneca dropped 11% after saying its annual profit would be at the low end of forecasts. The FTSE 100 Index fell 4.8% to 4005.68.

Crude oil after figures showed a higher-than-expected increase in U.S. inventories while fuel demand dropped. Stocks of oil rose by 1.6 million barrels to 313.5 million barrels last week, according to the Energy Department said. U.S. fuel demand weakened 7% in the past four weeks from the same, year-earlier period. Crude oil for December delivery fell 1.2% to US$53.74 a barrel on the New York Mercantile Exchange, and earlier reached a 22-month low of US$53.30.

Gold futures for December delivery rose 0.5% to US$736 an ounce in New York.


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