Wednesday, May 27, 2009

Wall Street Tumbles As Rising Treasury Yields Spook Investors, GM Sinks

. Wednesday, May 27, 2009

By stockOzone team

US stocks finished with losses on Wednesday as a steep drop in prices of US Treasury securities sparked economic fears. The Dow Jones Industrial Average tumbled 173.47 points or 2.05% to finish at 8,300.02. The S&P 500 lost 17.27 points or 1.90% to end at 893.06. The Nasdaq Composite slumped 19.35 points or 1.11% to 1,731.08.

Bond prices fell in the afternoon trade and yield curve, namely the difference in yields between 2-year and 10-year Treasury notes widened to a record 2.75% on concerns that rising U.S. debt issuance will negatively impact the Federal Reserve's quantitative easing program in its effort to keep borrowing costs low.

General Motors (NYSE: GM) sank 29 cents r 20.14% to $1.15. The company inched closer to bankruptcy as only a small fraction of bond holders took part in the company's $27 billion bond swap on Tuesday. GM offered a 10 percent equity stake of the reorganized GM in return for unsecured debt.

Shares of financials retreated. J.P Morgan (NYSE: JPM) plunged $1.88 or 5.15% to $34.66. American Express (NYSE: AXP) plummeted $1.07 or 4.35% to $23.50. Citigroup (NYSE: C) fell 7 cents or 1.86% to $3.70. Wells Fargo & Co. (NYSE: WFC) tumbled $1.57 or 6.12% to $24.08. Bank of America (NYSE: BAC) dropped 7 cents or 0.64% to $10.91.

Technology shares finished with losses. IBM (NYSE: IBM) subtracted $2.09 or 1.99% to $102.93. Shares of software giant Microsoft Corp. (NASDAQ: MSFT) decreased 21 cents or 1.03% to $20.13.

Alcoa Inc. (NYSE: AA) slipped 22 cents or 2.37% to $9.05.

Energy stocks finished down. Exxon Mobil (NYSE: XOM) lost $1.51 or 2.16% to $68.30. Chevron Corp. (NYSE: CVX) retreated $1.09 or 1.66% to $64.57.

General Electric Co. (NYSE: GE) lost 42 cents or 3.14% to $12.97.

Shares of Monsanto Co. (NYSE: MON) plummeted $5.37 or 6.30% to $79.8 after it said that it now expects 2009 earnings per share of about $4.40, the lowest point in its previously announced range of $4.40 to $4.50 due to strong competition in its Roundup herbicide operations cooler, wetter weather in some parts of the U.S. corn belt. The company also projected a profit for the quarter ending Saturday of $1.15 a share, far below the earlier forecast in the range of $1.60 to $1.62 a share.

Early on Wednesday, AutoZone Inc. (NYSE: AZO) said that third-quarter earnings climbed to $174 million, or $3.13 a share, compared to $159 million, or $2.49 a share, in the same period a year ago. Revenue increased to $1.66 billion from $1.52 billion. Shares of Autozone tumbled $7.80 or 4.79% to $155.04.

LED lighting maker Cree Inc. (NASDAQ: CREE) raised its fourth-quarter revenue guidance on stronger-than-expected orders for both lighting and laptop LED products. For the fiscal fourth quarter that will end June 28, Cree now expects earnings to range from 7 cents to 9 cents per share on revenue of $143 million to $150 million. Excluding some one-time items, adjusted earnings are expected to range from 15 cents to 17 cents per share. Shares of the company jumped $2.58 or 9.29% to $30.35.

Late on Tuesday, Take-Two (NASDAQ: TTWO) reported that it swung to fiscal second quarter net loss of $10.1 million, or 13 cents a share, compared to earnings of $98.2 million, or $1.29 a share, in the prior year quarter. Excluding charges and one-time items, the company lost $2.9 million, or 4 cents a share, in the recent quarter. Revenue declined 57% to $229.7 million. Shares of the company soared 70 cents or 7.93% to $9.53.

On the economic front, the National Association of Realtors said on Wednesday that existing home sales climbed 2.9% to a seasonally adjusted annual rate of 4.68 million in April. Economists expected a reading of 4.66 million.

European stocks settled higher. The UK FTSE rose 4.51 points or 1.06% to 4,416.23. The German DAX and French CAC advanced 0.30% and 0.76% respectively.

Asian stocks soared. The Nikkei 225 jumped 127.96 points or 1.37% to 9,438.77. The Hang Seng index of Hong Kong surged 893.71 points or 5.26% to 17,885.27.

NYMEX crude oil for May delivery climbed 98 cents or 1.6% to $63.43 a barrel.

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

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