U.S. MARKET AVERAGES

Delphi bankruptcy, even though rumored for weeks, jolted the market. Auto makers and parts makers came under heavy selling pressure. Lowered earnings outlook from Northrop and lowered revenue outlook from chip maker Xilinx Inc. kept the morning average gains in check. Morning trading got some lift on the news of purchase of Jefferson Pilot by Lincoln National creating the largest Life Insurance company. Afternoon trading was still mildly positive as Banc of America was added to the recommended list by Citigroup. Fall in oil price supported major averages till 2:00 PM. However, in the last hour of trading investors voiced concern on the rising inflation and cost of rebuilding in the aftermath of two recent hurricanes. Last thirty minutes of trading saw major averages drop by 0.5%.

General Motors (GM: chart) stock fell close to 10% and Ford Motor Company stock fell 3.3%. Auto parts maker joined the sell-off led by Delphi and Dana Corp. Delphi (DPH: chart) shares plunged 71% after the company filed for the bankruptcy protection. Dana Corp (DCN: chart) shares dropped 34% after company said that it will restate the earnings for the last several quarters and withdrew its earnings forecast for the current year. Shares of other auto parts maker such as ArvinMeritor (ARM: chart) fell 7.3% and American Axle fell 6.22%.

Refco (RFX: chart) shares dropped 40% on the news that company’s internal audit probe found that accounts receivable of $435 million was secretly transferred by its CEO to a company controlled by him. According to the company, the CEO, Phillip R. Bennett has repaid the debt owed to the company including interest charges, however the motive of the transfer is unknown. Mr. Bennett is on a indefinite leave of absence.


MOVERS AND SHAKERS

Auto parts maker Delphi (DPH: chart) dropped 57% after the company was pressed to file under Chapter 11 of federal bankruptcy on Saturday after failing to negotiate a restructuring with previous parent company General Motors (GM: chart) and the United Auto Workers union. The filing was the largest in the US auto industry and was linked to high wage and benefit expenses. General Motors fell 4.6%..

Auto system company Dana Corp. (DCN: chart) lost 29.9% after it said yesterday it will have to review earnings for 2004 and part of 2005 and postpone its third-quarter report, because of accounting controls issues. Dana has not set a new date for its third-quarter earnings release, which had been slated for October 19. The company has also withdrawn earnings forecasts for the fiscal year 2005.

Dow component International Business Machines Corp. (IBM: chart) added 1.7% after the company was upgraded at Citigroup to “buy” from “hold”. The broker cited as a reason the company’s strenght in computerr services, and gains in market share for mid-range and high-end servers market.

Another Dow component, Intel Corp. (INTC: chart), was up 1.7%, after a report in Wall Street Journal announcing that the company will introduce a series of dual-core server chips, as a part of its competition with rival Advanced Micro Devices (AMD: chart). The new chips promise up to a 50% improvement over systems with two single-core processors. Advanced Micro also rose 0.4%.

Jefferson-Pilot Corp. (JP: chart) is up 6.7% after the news that t will be bought by insurance provider Lincoln National Corp. (LNC: chart) for about $7.5 billion in cash and stock. This would be one of the biggest acquisitions in the financial sector recently. Lincoln National was up 1.5%.

ECONOMIC NEWS

No major economic news release is due out on Monday.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed with the Japanese Nikkei closed for a national holiday. Across the region Hong Kong’s Hang Seng added 0.3% with China Resources Enterprise and oil company CNOOC among the biggest gainers. South Korea’s Kospi rebounded from last week’s decline of 3% to climb 2% on third-quarter earnings forecasts and positive consumer sentiment index data. The Tokyo foreign exchange market was closed Monday.

European markets closed in the positive, boosted by telecom equipment stocks on news that Ericsson is near a deal with its smaller rival Marconi, resource shares and political news from Germany, saying that Angela Merkel will take over as the new government’s chancellor. Narrow trading range on Wall Street capped European gains. The German DAX 30 added 0.3%, the French CAC 40 rose 0.2%, and London’s FTSE 100 increased 0.2%.

ENERGY, METALS, CURRENCIES

Oil prices declined as traders weighed the approaching winter season in the Northern Hemisphere and the lower fuel demand. Light sweet crude for November delivery fell 4 cents to trade at $61.80 a barrel on the Nymex. Heating oil rose about 1.17 cents to $1.972 a gallon. Gasoline slipped nearly 2.42 cents to $1.805 a gallon. London Brent dropped $1.04 to $58.17.

Gold hit an 18-year high, climbing close to $480 in European trading. In London the precious metal December contract briefly touched $479.60 per ounce, but then retreated to $477.40. per troy ounce, up from $475. In Hong Kong gold rose $6 to close at $478.55. Silver jumped to a 10-month high, trading at $7.82 up from $7.67.

Copper hit a record price of $1.82 a pound on supply-and-demand issues.

In European trading the U.S. dollar climbed against its major counterparts on positive payroll data Friday and news that Angela Merkel will take over as the new German chancellor, a fact raising doubts about the healing reforms in the country’s economy. The euro was quoted at $1.2044, down from $1.2121.The dollar changed hands at 114.27 yen, up from 113.76. The British pound was trading at $1.752, down from $1.7624.