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Date Posted: 18:32:37 10/13/09 Tue
Author: On Tuesday October 13th 2009===US market
Subject: Whitbread reported===earnings to August 27th Thursday

US Stocks Close Lower as Goldman, J&J Weigh on Trading

Goldman Sachs and Johnson & Johnson weighed on the banking and health-care industries, respectively, on Tuesday, in a tug of war against more rallying for the materials sector that helped stocks close only slightly lower.

Overall, the Dow Jones Industrial Average closed down 14.74 points (0.15%) to 9,871.06, marking its first drop in four sessions. Within the index, Dow components Pfizer, off 32 cents (1.9%) at $16.78, and Merck, down 44 cents (1.3%) at $32.42, were two of its weakest as the Senate Finance Committee's approval of a health-care reform bill weighed on the sector. In addition, Johnson & Johnson fell $1.52 (2.4%) to $61.01, after the pharmaceutical company's third-quarter revenue came in shy of Wall Street's expectations.


Banks were also particularly weak after a bank analyst downgraded shares of Goldman Sachs, which reports results on Thursday, to neutral from buy. Goldman closed off $2.92 (1.5%) at $187.23, with Dow component JPMorgan Chase closing down 42 cents (0.9%) at $45.66, ahead of its earnings report on Wednesday.


Among other indexes, the Standard & Poor's 500 slipped 3.00 points (0.28%) to 1,073.18, breaking a six-session winning streak. The Nasdaq Composite bucked the trend of a sliding stock market, finishing up 0.75 (0.04%) at 2,139.89.


With gold and other metals once again finishing higher, with gold closing at a record high on Tuesday, several metals stocks finished higher on the session. Gold miner Newmont Mining was strong, up $1.20 (2.6%) at $47.68, while United States Steel gained $1.40 (3.3%) to $43.81.


For the second day this week, volume was particularly light, with NYSE Composite volume coming in at about 4.6bn shares, compared with a 2009 average of nearly 6bn. With the earnings period set to escalate in the next couple of days, there appeared to be a slight waiting game among traders.


For Australian ADRs listed on the NYSE, BHP Billiton slipped 20 cents (0.29%) to US$68.68, Rio Tinto Plc advanced $1.22 (0.67%) to US$182.47, ResMed climbed 70 cents (1.49%) to US$47.55, Telstra Corporation weakened 6 cents (0.41%) to US$14.44, Telecom Corporation of NZ fell 1 cent (0.11%) to US$9.47 and Westpac rose 37 cents (0.31%) to US$118.85.


The Treasury market made a strong comeback on Tuesday following the Columbus Day holiday, as bond prices rallied across the board, recovering from a bout of heavy selling at the end of last week. At 7:45 AM (AEST), the 10-year Treasury note yield was 3.32% and the five year yield was 2.26%.


European shares ended trade in negative territory, with investors unwilling to build on multi-month highs amid fresh reminders of the fragility of the economic outlook.


The pan-European Dow Jones Stoxx 600 index lost 1% to close at 241.94, although it remains up 22% for the year.


Economic data remains patchy. On Tuesday, the ZEW German economic sentiment indicator showed an unexpected decline. In the UK, consumer prices rose at their slowest annual pace in five years in September, government data showed.


The UK FTSE 100 index declined 1.1% to settle at 5,154.15, the German DAX index lost 1.2% to end at 5,714.31 and the French CAC-40 index fell 1.2% to 3,801.39.


Construction firms and carmakers, which are leveraged to economic growth, declined on Tuesday. Daimler shares fell 0.9% and Saint-Gobain shares were down 3%.


Banks and insurance firms also pulled back, with Credit Agricole shares down 2.8% in Paris and Deutsche Postbank down 2.8% in Frankfurt.


Banks have seen sharp gains since March, as investors became willing to take on more risk amid signs that the economic backdrop was improving.


Of the few companies updating investors, hotel and restaurant operator Whitbread rose 0.5%. The firm’s net income for the six months to Aug. 27 rose 81% to GBP73.6m. Revenue grew 3% to GBP703.3m as declining revenue at its hotels and restaurants business was partly offset by a 20% rise in sales at its Costa Coffee chain. Revenue per available room at the Premier Inn hotel chain was down 9.2% but outperformed an 11% drop for the broader hotel industry, the firm said.


UK retailer Marks & Spencer fell 4.3% as the company hosted an investor day, featuring presentations by senior managers.


On the FTSE 100, Rio Tinto weakened 50.50 pence (1.74%) to 2,885.34 pence and BHP Billiton dropped 20.50 pence (1.15%) to 1,781.17 pence.


Asian shares ended mostly higher with automotive stocks in China and Hong Kong gaining on strong earnings forecasts and sales.


The Shanghai Composite rose 1.4% to 2,936.19, while in Hong Kong, the Hang Seng Index gained 0.8% to 21,467.36. Japan's Nikkei 225 Average climbed 0.6% to 10,076.56.


New Zealand shares finished lower on Tuesday, as a high local currency took its toll on big-cap stocks like Fletcher Building. Brokers said the high New Zealand dollar and the ongoing earnings season in the US will continue to set the pace for market activity over the short run. The benchmark NZX-50 ended down 0.3%, or 9.42 points, at 3,169.46.


Copper led base metals lower in London after news that a labour settlement was reached at Chile's Escondida, the world's largest copper mine. Aluminium fell $34 (1.76%) to $1,901 while copper weakened $145 (2.32%) to $6,110 and nickel dropped $520 (2.77%) to $18,280. Zinc shed $65 (3.12%) to $2,020 and lead lost $100 (4.38%) to $2,185. Comex copper was last quoted at 278.60 US cents per pound.


Spot gold was last quoted at $1,063.90. Comex gold futures added $7.50 (0.71%) to $1,065.00. Spot silver was last quoted at $17.69.


Crude oil prices ended higher, buoyed by sustained weakness in the US dollar and recent renewed optimism for an economic recovery. West Texas Intermediate was last quoted at US$74.15 per barrel.


The euro continued its run against the US dollar on Tuesday, hitting a one-year high in early trading, before giving back some of those gains on wavering US stocks and profit-taking.


At 08:05 a.m. (AET) the US dollar was quoted at 0.6733 euros, 89.64 yen, 1.100 AUD and 62.83 pence.

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