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US close: Shares fall despite bank rescue
Thu, 20 Nov, 2008
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US close: Shares fall despite bank rescue
Tue, 14 Oct 2008, 21:46:00
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After yesterday's unprecedented 11% surge, Wall Street closed lower as investors grappled with the ramifications of the government's $250bn recapitalisation plan for the US banking system.<br /><br />Dow Jones closed down 76 at 9,310. Nasdaq shed 65 at 1,779 while the S&P 500 fell 5 at 998.<br /><br />Nine banks have requested government capital under the proposals by the Bush administration to spend $250bn taking share holdings in viable US banks. <br /><br />In echoes of the deal launched by the British government, the government will receive senior non-voting preferred shares and warrants to purchase ordinary shares in return for a capital injection, and any bank which takes advantage of the facility will be constrained by limits on executive remuneration and must adopt various corporate governance rules.<br /><br />The preferred shares will pay a dividend of 5% per annum for the first five years and a dividend of 9% thereafter until the stock is repurchased by the issuing bank. The programme also included government insurance on all new bank credits.<br /><br />Bank shares reacted favourably to the government's package. Regionals such as <b>National City</b>, <b>Keycorp</b> and <b>Huntington</b> soared, while internationally known banks such as <b>Morgan Stanley</b>, <b>Merrill Lynch</b>, <b>Citigroup</b>, <b>Bank of America</b> and <b>American Express</b> notched up double-digit percentage gains.<br /><br />One exception was <b>JP Morgan</b>, which has surrendered earlier gains.<br /><br />Bermuda-based insurer <b>XL Capital</b> moved sharply higher after the chief executive officer, Michael McGavick, said the company sees no need for the company to raise fresh capital at this time.<br /><br />Outside of the financial sector, gains were more modest. Consumer products giant <b>3M</b> was wanted after Goldman Sachs upgraded the stock from "sell" to "neutral". <br /><br />Healthcare products maker <b>Johnson & Johnson</b> scrubbed up well after third-quarter profits came in ahead of expectations.<br /><br />Strength in the US dollar prompted <b>Pepsico</b>, the company behind Pepsi Cola and a host of other drinks and snacks, to lower its earnings guidance for the fourth quarter. The company now expects earnings per share (EPS) of $3.67 to $3.68 during the period, compared with previous guidance of $3.72. The share price lost its fizz and also prompted a mark down in perennial rival <b>Coca Cola</b>.<br /><br />Computer chip-maker <b>Intel<//b> is marked lower ahead of results after the close tonight in a generally weak tech sector which also saw software leviathan <b>Microsoft</b>, online retailer <b>Amazon</b> and PC-maker <b>Dell</b> sharply weaker.<br /><br /><b>S&P 500 - Risers</b><br />Xl Capital Ltd. (XL) $11.44 +53.97%<br />Keycorp (KEY) $11.85 +52.71%<br />Natl City Corp. (NCC) $3.15 +36.96%<br />Huntington Bancshares Inc. (HBAN) $9.24 +36.86%<br />Hartford Fin Svc (HIG) $33.25 +35.00%<br />Slm Corp. (SLM) $11.34 +33.10%<br /><br /><b>S&P 500 - Fallers</b><br />Dynegy Inc. Holdings Co (DYN) $3.29 -18.97%<br />Massey Energy Co (MEE) $22.86 -13.64%<br />Nucor Corp. (NUE) $34.20 -12.95%<br />Pepsico Inc. (PEP) $54.00 -12.58%<br />Charles Schwab Corp. (SCHW) $20.50 -12.13%<br />Tiffany And Co (TIF) $28.75 -11.67%<br /><b><br />Dow Jones I.A - Risers</b><br />Citigroup Inc. (C) $18.65 +18.41%<br />Bank Of America Corp. (BAC) $26.20 +14.96%<br />American Express Inc. (AXP) $28.00 +2.56%<br />Johnson and Johnson (JNJ) $64.15 +2.35%<br />AT&T Inc. (T) $26.68 +2.34%<br />Pfizer Inc. (PFE) $17.00 +1.92%<br /><b><br />Dow Jones I.A - Fallers</b><br />Coca Cola Co (KO) $43.73 -7.47%<br />Microsoft Corp. (MSFT) $23.86 -6.43%<br />Intel Corp. (INTC) $15.93 -6.24%<br />Alcoa Inc. (AA) $12.99 -6.01%<br />Boeing Co (BA) $45.07 -4.27%<br />Caterpillar Inc. (CAT) $47.49 -4.02%<br /><br />
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