| CATEGORY: MARKET REPORT - US CLOSE |
US close: G20 package lifts Dow |
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Thu 02 Apr 2009
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LONDON (SHARECAST) - US shares made strong gains matching rises in Europe on a $1trn package cobbled together at the G20 summit and changes to the "mark-to-market" accounting rule for banks.
Dow closed up 216 at 7,978, having been over 8,000 earlier in the day. Nasdaq added 52 at 1,602, while the S&P 500 gained 23 at 834.
The "mark-to market" requirement forces banks to value debts based on the current market value. As banks collapsed and asset values tumbled, critics say it has accelerated the financial crisis. The changes come just ahead of the next bank quarterly earnings reporting season.
Under the new rules, banks can value the assets according to their own internal measures and also split losses attributable to a security away from general market movements.
The changes added to a mood of optimism following G20's wide-ranging agreement. Leaders at the G20 summit in London agreed a plan to put the International Monetary Fund at the heart of efforts to kick-start the ailing global economy.
The major part of the plan involves Japan, the EU and other countries making $750bn available for the IMF to rescue struggling economies, compared with $250bn previously. Another part of the package involves a trade finance package worth to support trade between countries.
A third tenet will give countries the right to swap their own currencies for IMF resources, meaning they can deplete their resources and expand. The new plan will include action on tax havens, with blacklists being published in the near future. France and Germany have been pushing for action in this area. Tighter regulation of hedge funds and offshore tax havens is also on the way.
On the economic front, the government said 669,000 people filed for first-time unemployment benefits last week against 657,000 the prior week. The figures were ahead of forecasts.
In corporate news, wholesale giant Costco is to close its two homeware outlets after feeling the knock-on effects of the housing downturn. The company, which operates 554 warehouses around the world, including 21 in the UK, said it will close its Costco Home stores in Kirkland, Washington, and Tempe, Arizona on July 3.
Seed giant Monsanto reported profits ahead of expectations as second quarter sales reached record levels. The company, based in St Louis, Kansas, saw revenues rise from $3.727bn in the second quarter of 2008 to $4.035bn in the second quarter of this year, with corn seed and traits revenues accounting for more than half of sales.
Earnings per share (EPS) slipped to $1.97 from $2.02, partly due to a decline in its herbicides business. Monsanto said its full-year 2009 EPS is expected to be in the range of $4.23 to $4.33 on a reported basis.
Caterpillar, Walt Disney and DuPont all climbed more than 7% on growing speculation the world economy may have bottomed even though initial jobless claims hit a 26-year high.
S&P 500 - Risers
Wynn Resorts Ltd. (WYNN) $26.85 +24.59%
Office Depot Inc. (ODP) $1.75 +21.53%
Cbs Corp. Class B (CBS) $4.67 +20.36%
Wyndham Worldwide (WYN) $5.68 +19.58%
Cit Group Inc. (Del) (CIT) $3.19 +16.42%
S&P 500 - Fallers
Lincoln Natl Corp. (LNC) $6.47 -8.49%
Northern Trust Corp. (NTRS) $59.30 -5.81%
Autozone Inc. (AZO) $158.30 -5.11%
Qwest Comm International Inc. (Q) $3.59 -4.27%
Bristol Myers Sqibb (BMY) $21.32 -2.96%
Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $31.50 +8.66%
Du Pont E I De Nem (DD) $25.24 +7.68%
Walt Disney-Disney C (DIS) $20.21 +7.56%
Alcoa Inc. (AA) $8.16 +7.37%
Gen Electric Co (GE) $10.75 +5.71%
Dow Jones I.A - Fallers
Pfizer Inc. (PFE) $13.77 -1.57%
Johnson and Johnson (JNJ) $52.93 -0.21%
Jp Morgan Chase Co (JPM) $28.11 -0.11%
Microsoft Corp. (MSFT) $19.29 -0.10%
Merck Co Inc. (MRK) $26.98 -0.04%
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