US Closing Market Report

Date: Wednesday 19 May 2010

US close: Dow ends lower

After early attempts to move into positive territory US stocks closed lower though there was an attempt at a rally near the close.

Worries about the global economy continued to dog the US indices after German chancellor Angela Merkel’s comments that Europe is facing its greatest crisis in decades and could see a possible collapse of the euro.

Dow Jones closed 66 points lower at 10,444. Nasdaq fell 18 points at 2,298. The S&P 500 was down 5 points to 1,115.

Merkel's comments followed a shock move last night by the German financial regulator BaFin to impose a ban on short-selling of European bonds, credit default swaps and ten of Germany’s biggest financial groups. The ban will run until 31 March 2011.

Exporters, such as Caterpillar, 3M and Boeing, are lower on concerns about global demand.

UBS says that Visa and Mastercard have been oversold following last week’s US Senate vote to curb debit card fees.

Discounter Target posted higher quarterly net earnings of $671m, up from $522m last year and said it was “very pleased” with its performance.

Deere saw second-quarter net profits jump 16% to $547.5m and it is raising its outlook for the second time this year.

Chips maker Analog Devices forecasts third quarter earnings of 59 cents a share, which is well above expectations.

More bidders have appeared for rubbish bag maker Pactiv Corp. There are at least three businesses rumoured to be interested in making an offer for the company, including Apollo Management and Georgia-Pacific.

Marine electronics firm Garmin is rising after it gave up in its attempt to buy rival Raymarine.

Shares in Abercrombie & Fitch continue to fall after yesterday’s disappointing first quarter figures. After hours last night, Hewlett-Packard reported net income rose 29% to $2.2bn, or 91 cents per share in its second quarter to April, up from $1.7bn a year ago. HP is the biggest riser on the Dow.

On the economic front, minutes from the Federal Reserve's last meeting showed a more upbeat assessment of economic growth this year and an expectation of lower unemployment than in previous meetings.

US inflation remained muted in April. The Bureau of Labor Statistics reported that the consumer price index slipped 0.1% in April, experts expected a 0.1% rise. Core inflation rose 0.9% on an annual basis.

The Securities and Exchange Commission has proposed new rules under which US stock exchanges would briefly halt trading in individual stocks that have big price swings.

The proposed “circuit breaker” mechanism is aimed at avoiding rapid market plunges like the one that rattled Wall Street on 6 May. The mechanism would briefly halt trading in stocks that experience a 10% price change in the preceding five minutes.

S&P 500 - Risers
Pactiv Corp. (PTV) $29.74 +6.59%
Analog Devices (ADI) $28.76 +4.20%
E*Trade Financial Corp. (ETFC) $1.55 +4.03%
Visa Inc (V) $72.91 +4.02%

S&P 500 - Fallers
Harman International Inds (HAR) $31.74 -7.65%
Zions Bancorporation (ZION) $24.49 -6.10%
Whirlpool Corp. (WHR) $99.49 -4.77%
Jacobs Engineerng Group (JEC) $43.02 -4.51%

Dow Jones I.A - Risers
Bank Of America Corp. (BAC) $16.34 +2.45%
American Express Inc. (AXP) $40.22 +0.95%
Merck & Co. Inc. (MRK) $32.63 +0.87%
JP Morgan Chase & Co. (JPM) $39.35 +0.85%

Dow Jones I.A - Fallers
Caterpillar Inc. (CAT) $61.41 -2.82%
Boeing Co. (BA) $66.22 -2.22%
3M Co. (MMM) $82.47 -1.84%
United Technologies Corp. (UTX) $69.38 -1.84%