Thursday, May 21, 2009

Wall Street Ends Lower On Credit-Rating Worries, GE Retreats

. Thursday, May 21, 2009

By stockOzone team

US stocks finished lower on Wednesday after Standard & Poor's cut its outlook on Britain to negative from stable fueling fears that the United States too is at risk of losing its AAA credit rating. The Dow Jones Industrial Average declined 129.91 points or 1.54% to finish at 8,292.13. The S&P 500 retreated 15.14 points or 1.68% to end at 888.33. The Nasdaq Composite slumped 32.59 points or 1.89% to 1,695.25.

Ratings agency Standard & Poor's cut its outlook on Britain to negative on Thursday, citing massive government debt and political uncertainty about the policy response amid looming elections. However, the agency affirmed Britain's 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.

Meanwhile, in an interview with CNBC, Bill Gross, co-founder of Pacific Investment Management Co, warned that U.S.’s top AAA credit rating will be “eventually” lost.

Industrial stocks were the hardest hit. Caterpillar Inc. (NYSE: CAT) tumbled $1.76 or 4.72% to $35.54.

United Technologies (NYSE: UTX) finished at $5.76, down 98 cents or 1.89%.

General Electric Co. (NYSE: GE) plummeted 53 cents or 3.85% to $13.24.

Shares of the largest US aluminum maker Alcoa Inc. (NYSE: AA) plunged 39 cents or 4.11% to $9.10.

Energy stocks finished lower. Exxon Mobil (NYSE: XOM) subtracted $1.22 or 1.75% to $13.24. Chevron Corp. (NYSE: CVX) fell 74 cents or 1.13% to $64.47.

The biggest US home improvement retailer Home Depot (NYSE: HD) lost 94 cents or 3.94% to $22.89.

Shares of General Motors (NYSE: GM) surged 47 cents or 32.41% to $1.92. The Treasury Department is set to bailout GMAC, the former financing arm of troubled automaker GM (NYSE: GM) by injecting more capital.

Chinese solar panel maker Suntech Power Holdings (NYSE: STP) said that its first-quarter net profit fell 95% to $2.1 million, or 1 cent a share, from $45.3 million, or 27 cents a share, in the prior year quarter. Quarterly revenue declined 27% to $315.7 million. Shares of the company sank $2.36 or 14.91% to $13.47.

Japanese electronic giant Sony Corp. (NYSE: SNE) retreated 33 cents or 1.26% to $25.78 after it said that it will halve the number of parts suppliers and will cut purchasing costs by 500 billion yen ($5.3 billion), or 20 percent of the 2.5 trillion yen spent during the fiscal year ended March as part of a turnaround plan.

On the economic front, a release by Department of Labor on Thursday showed number of Americans filing first- time claims for unemployment benefits fell 12,000 to 631,00 in the week ending May 16. Economists had forecast jobless claims to drop to 625,000. The four-week average of seasonally adjusted initial jobless claims, a less volatile gauge, decreased by 3,500 to 628,500. Continuing claims for the week ending May 9 climbed 75,000 to a record 6.66 million.

According to the Conference Board, the index of leading economic indicators climbed 1% in April - the first increase in seven months.

European stocks settled with losses. The UK FTSE dropped 122.94 points or 2.75% to 4,345.47. The German DAX and French CAC slid 2.74% and 2.74%.

Asian stocks finished lower. The Nikkei 225 fell 80.49 points or 0.86% to 9,264.15. The Hang Seng index of Hong Kong dropped 276.35 points or 1.58% to 17,199.49.

NYMEX crude oil for May delivery declined 99 cents or 1.6% to settle at $61.05 a barrel.

Disclosure: Author does not own any of the stocks discussed here.

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