| CATEGORY: MARKET REPORT - US CLOSE |
US close: Big lead disappears |
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Wed 29 Oct 2008
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LONDON (SHARECAST) - Wall Street rallied following the widely predicted half point cut in US interest rates Wednesday afternoon, but downbeat comment on the economy prompted a wave of selling late on.
The Dow Jones lost way over 300 points in the last few minutes of trade as investors got the jitters ahead of tomorrow’s GDP figures. The blue chip index closed 74 lower at 8,990, the Nasdaq Composite rose 7 to 1,657, while the broader S&P 500 lost 10 points to 930.
Federal reserve policymakers cut US borrowing costs to just 1% from 1.5% previously, taking the fed funds rate down to its lowest since June 2004. But they worry about tighter credit conditions, the financial crisis and weaker consumer spending.
China's central bank today cut its benchmark interest rates on loans and deposits for the third time in six weeks, while there are strong indications that the Bank of Japan is also considering a rate cut.
Tomorrow sees the release of third quarter GDP numbers, which are expected to reveal a 0.5% annual decline following a 2.8% rise in the previous three-month period.
The Commerce Department said Wednesday that new orders for manufactured big-ticket items rose 0.8% in September compared to a revised 5.5% fall in August. Experts anticipated a 1.5% drop. September saw a rise in aircraft orders and an increase in defence related orders; with transport equipment excluded, order for US durable goods fell by 1.1%.
Domestic cleaning products maker Procter & Gamble saw sales grow 9% to $22bn thanks to sales in its home and baby care divisions.
General Motors reported a 11% drop in third-quarter world-wide sales, with sales in North American down 19% versus a year ago.
Kraft Foods more than doubled diluted third quarter earnings per share (EPS) after the maker of Ritz crackers and Oreo biscuits raised prices to cope with higher commodity prices. Diluted EPS rose to $0.93 from $0.44 over the same period a year ago, as sales climbed 19.4% to $10.5bn.
“Strong organic net revenue growth was driven by pricing actions to offset significantly higher input costs,” the Northfield, Illinois-based company said. "Kraft had a strong quarter in a difficult environment," added chairman and chief executive Irene Rosenfeld.
Breakfast cereal maker Kellogg reported rises in third quarter sales and earnings per share (EPS) despite having to pay higher prices for commodities such as corn and sugar. The company said net sales rose to $3.3bn, up 9% from the same period a year ago, while EPS rose 17% to $0.89 a share.
Kellogg said it now anticipates that 2008 EPS will be closer to the high end of the previous guidance of $2.95 to $3.00, adding that it remains confident of high single digit EPS growth over 2009.
Money manager Legg Mason improved after second quarter earnings per share came in ahead of market expectations at $0.97. Analysts had been anticipating earnings of $0.86 per share.
Health insurer Aetna looked sickly after it slimmed down its earnings forecast for the year as a result of credit-crunch related losses on investments.
Healthcare product maker Johnson & Johnson was among the worst performing Dow Jones constituents after its rating was cut to “neutral” from “overweight” by JPMorgan on fears of competition from generic drugs.
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