5:45PM New York, – U.S. stocks declined after investors pulled back from financial stocks. Five banks took advantage of recent market strengths and filed to raise capital. Microsoft is expected to price its first debt offering of as much as $3.7 billion. Markets in Europe declined on a weakness in energy and metals prices.
U.S. stocks closed lower after financials fell. Speculators argued that stocks and banks have recorded gains that are not sustainable and it will be years before the normal economic growth resumes. Prudential Financial, American Express, BB&T, and Capital One declined.
More banks use the current market conditions to raise additional capital and cut dividend to meet regulatory capital requirements. Capital One, KeyCorp, BB&T Corp and U.S. Bancorp filed or declared to raise capital.
Microsoft is expected to price its first ever debt offering today and raise as much as $3.7 billion. The offering may include a mix of 5-year, 10-year and 30-year debts. S&P has assigned its highest rating to Microsoft debt. Microsoft plans to use the proceeds to fund its $40 billion stock repurchase program and the company said it does not need capital for its business operations.
Market indexes in Europe declined after a weakness in banks, mining and industrial companies. Stocks in Germany fell after Commerzbank planned to sell debt and TUI AG reported weak earnings. Manufacturing in France and in Germany declined.
Stocks in UK declined after metal prices weakened and HSBC reported a rise in bad debt provisions. Lonmin plunged 10% after it offered a right issue and reported operating loss. Centrica agreed to pay £2.3 billion for 20% stake in British Energy to EDF. Traffic at UK airports declined in April.
Stocks in Tokyo edged higher and yen declined 1.3%. The commodities prices in the region remained elevated as the optimism about global economy prevailed. Financials and real estate companies led gainers. Orix surged on estimate of 37% income rise but Bridgestone dropped 7% wider loss.
Australian business conditions improve in April. Santos to raise A$3 billion for expansion in Papua New Guinea and repay $600 million of hybrid securities issued in 2004. Exxon controls 41% stake in the venture. Fortescue Metals Group may list its shares in Shanghai.
Economy in India expanded at 6.5% in the fiscal year ending in March of 2009. Stocks and rupee declined ahead of election results and weak sentiment in global markets. Hindustan Unilever dropped after it reported weak earnings rise. Industrial production in March is expected to fall.
North American Markets
Dow Jones Industrial Average declined 155.88 or 1.82% to a close of 8,418.77, S&P 500 Index fell 19.99 or 2.2% to 909.24, and Nasdaq Composite Index decreased 7.76 or 0.45% to close at 1,731.24. In Toronto TSX Composite Index closed down 143.85 or 1.4% to 10,094.14.
Of the stocks in S&P 500 index, 403 increased, 95 declined and 2 were unchanged.
Nvidia Corp led decliners in the S&P 500 index with a loss of 13.8% followed by losses in Allstate Corp of 5.4%, in Microchip Tech of 5.2%, in Broadcom Corp of 5.1% and in SanDisk Corp of 5.1%.
Fifth Third Bancorp led gainers in the S&P 500 index with a surge of 58% followed by gains in Dynegy Inc of 37%, in Huntington Bancshares of 33.7%, in Marshall & Ilsley of 27.5%, in Zions Bancorp of 27.1% and in Regions Financial of 24.9%.
South American Markets Indexes
Mexico Bolsa Index fell 142.56 or 0.6% to 23,943.02. Brazil Bovespa Stock Index declined 419.60 or 0.82% to 50,976.39.
Argentina Merval Index added 0.8%, Chile Stock Market Select index increased 0.6% and Peru Lima General Index decreased 0.1%. Colombia IGBC General Index fell back 1.4% and Venezuela Stock Market Index edged down 0.4%.
Europe Markets Review
In London FTSE 100 Index closed lower 26.59 or 0.60% to 4,435.50, in Paris CAC 40 Index decreased 63.92 or 1.93% to close at 3,248.67 and in Frankfurt DAX index lower 46.99 or 0.96% to close at 4,866.91. In Zurich trading SMI decreased 32.07 or 0.59% to close at 5,358.94.
Asian Markets Review