Market concern that analyst may be too optimistic about credit-market conditions
Global Market
ECB said the financial-market crisis is not over as banks remain reluctant to lend and indicated to intent on inflation. Lending has declined buffeted by the collapse of the U.S. subprime mortgage market. To facilitate it, ECB has made extra liquidity available to banks for six months. The Bank of England plans to swap government bonds for mortgage securities. But the cost of borrowing euros still climbed to 4.81 percent.
Bank of America Corp. net income dropped 77 percent in the first quarter as they set aside $6.01 billion for bad loans. ECB main priority is reducing inflation to below 2 percent.
Citigroup Inc. bolstered its capital by selling preferred shares. The bonds pay interest of 8.4 percent for 10 years. After that, the interest rate will convert to a floating rate. Citigroup is building up more loan reserves. The bank still has some financial problems.
CIT Group Inc. plans to sell common stock and preferred shares to raise $1 billion. Last week, Citigroup reported a $5.11 billion first-quarter loss and cut 9,000 jobs.
The bank's Tier I capital ratio fell to 7.7 percent. That compares with 8.3 percent at JPMorgan and 7.5 percent at Bank of America Corp. Citigroup says 7.5 percent ratio needs to provide safety and preserve its credit ratings.
Stock Market
U.S. stocks fell after losses at Bank of America Corp. and National City Corp. undermined confidence that financial market already firm from crisis. Bank of America retreated after first-quarter profit to trail analysts' estimates. National City tumbled as they cut its dividend and sell stock at a 40 percent discount. Schlumberger Ltd. led a rally in energy shares and limited index decline.
The Standard & Poor's 500 Index lost 2.17 points to 1,388.16. The Dow Jones Industrial Average retreated 24.34 to 12,825.02. The Nasdaq Composite Index added 5.07 to 2,408.04 as Apple Inc. climbed on raised its earnings projection by analyst.
The profit reports from Bank of America and National City increased concern that analyst may be too optimistic about credit-market conditions. Bank of America dropped 95 cents to $37.61. Earnings was down 77 percent as they set aside $6.01 billion for bad loans, $1.31 billion in trading losses and $2.72 billion in costs for uncollectible debt. National City fell $2.30 to $6.03. They said investors will buy shares for $5 each. They plans to slash its dividend to 1 cent from 21 cents and posted net loss of 27 cents a share. First Horizon National Corp. lost $1.23 to $11.83. Cleveland-based KeyCorp dropped $1.51 to $23.17. Sovereign Bancorp Inc. retreated 86 cents to $8.43. Citigroup Inc. fell 8 cents to $25.03. Analyst said they may cut or eliminate its dividend.
Wells Fargo retreated $1.13 to $29.27. Analyst cut their rating to underperform and estimate price-to-earnings ratio may fall. Caterpillar lost $1.95 to $83.33. Their rating was reduced to market perform. Sears Holdings Corp. declined $7.24 to $97.48. They said Bank of America wouldn't renew a $1 billion letter of credit but it won't affect Sears's access to cash.
Eli Lilly & Co. fell $2.48 to $49.59. Their earning trailed analysts' estimates. Mattel Inc. dropped $1.78 to $20. Their first quarterly loss miss analyst forecast on higher manufacturing costs. Analysts had expected a profit. Hasbro Inc. posted an increase in profit on sales. The shares added $3.10 to $34.65.
Apple added $7.12 to $168.16 after analysts raised their second-quarter profit estimate. Schlumberger gained $5.06 to $106.91. Their rating was raised to overweight and increased its share-price estimate to $135 from $125.
Exxon Mobil Corp. gained 26 cents to $94.26, while ConocoPhillips added 45 cents to $84.34, after rebel attacks in Nigeria reduced crude oil output.
Quest Diagnostics Inc. rose $3.50 to $49.12. They reported first-quarter earnings that topped analysts' estimates.
Currencies
The dollar traded low against the euro before an report forecast to show U.S. sales of existing homes fell last month. The euro was high against the yen after ECB said oil prices are pushing up wages, increasing the chance interest rates will stay high. The pound traded low against the euro on speculation plan to swap government bonds for mortgage securities won't be enough to revive lending.
The dollar traded at $1.5912 per euro. The euro traded at 164.41 yen. The dollar was at 103.33 yen. The dollar may fall to $1.60 per euro and 101.50 yen. Against the euro, the pound traded at 80.33 pence. The U.K. currency was little changed at $1.9805.
Norway's krone was at 4.9976 per dollar. Oil touched a record $117.83 per barrel, and traders bet the central bank will raise the 5.25 percent target lending rate by a quarter-percentage point.
Sales forecast of existing homes in the U.S. fell to 4.92 million, from 5.03 million the last month.
Sterling weakened versus the Swedish krona and the Australian dollar as the Bank of England's plan to swap 50 billion pounds of government bonds for mortgage-backed securities disappointed investors. The pound last bought 11.6676 Swedish kronor and A$2.0989. Lehman recommended that investors sell the pound against the dollar as BOE to cut its rate to 4 percent.
The dollar remained lower against the euro as Bank of America Corp. reported a 77 percent drop in first-quarter profit. The dollar rose against the euro after Citigroup Inc. reported first-quarter revenue above analysts' consensus forecasts.
Commodities
Oil
Crude oil traded above $117 a barrel after attacks cut Nigerian output and the dollar dropped against the euro. Royal Dutch Shell Plc said 169,000 barrels of oil a day was suspended because of attacks in Nigeria. OPEC should help replenish oil inventories because prices are too high.
Crude oil for May delivery rose 2 cents to $117.50 a barrel. Brent crude for June settlement rose 51 cents to $114.43 a barrel.
The dollar fell against the euro after ECB reiterated concern inflation is accelerating, increasing chances interest rates will stay. The dollar traded at $1.5909 per. The euro traded at 164.25 yen. The dollar was at 103.24 yen.
OPEC produced 32.35 million barrels of crude a day in March and kept its production targets unchanged. Shell will declare a force majeure on exports of Bonny Light crude oil as a result of the April 17 attack. Nigeria produces low-sulfur oil prized by refiners because of the proportion of high-value gasoline it yields. It was the fifth-biggest source of U.S. oil imports.
Gold
Gold rose after energy costs surged and the dollar weakened against the euro. Silver fell. Crude-oil futures jumped to a record $117.60 a barrel. The euro traded $1.5947.
Gold futures for June delivery climbed $2.40 to $917.60 an ounce. The price may trade around $940 in the next three months and fall to $920 in six months. Silver futures for May delivery tumbled 46 cents to $17.36 an ounce.
The euro rose on speculation ECB will keep its rate steady to head off inflation. The ECB has kept its benchmark unchanged at 4 percent since June.
Gold's gains may be limited as slower demand. Investment in the StreetTracks Gold Trust was unchanged at 641.8 metric tons.
Speculative long gold positions outnumbered short positions by 171,977 contracts on the Comex. As lower interest rates begin bolstering the U.S. economy, the dollar will strengthen and gold may drop to $835.
ECB said the financial-market crisis is not over as banks remain reluctant to lend and indicated to intent on inflation. Lending has declined buffeted by the collapse of the U.S. subprime mortgage market. To facilitate it, ECB has made extra liquidity available to banks for six months. The Bank of England plans to swap government bonds for mortgage securities. But the cost of borrowing euros still climbed to 4.81 percent.
Bank of America Corp. net income dropped 77 percent in the first quarter as they set aside $6.01 billion for bad loans. ECB main priority is reducing inflation to below 2 percent.
Citigroup Inc. bolstered its capital by selling preferred shares. The bonds pay interest of 8.4 percent for 10 years. After that, the interest rate will convert to a floating rate. Citigroup is building up more loan reserves. The bank still has some financial problems.
CIT Group Inc. plans to sell common stock and preferred shares to raise $1 billion. Last week, Citigroup reported a $5.11 billion first-quarter loss and cut 9,000 jobs.
The bank's Tier I capital ratio fell to 7.7 percent. That compares with 8.3 percent at JPMorgan and 7.5 percent at Bank of America Corp. Citigroup says 7.5 percent ratio needs to provide safety and preserve its credit ratings.
Stock Market
U.S. stocks fell after losses at Bank of America Corp. and National City Corp. undermined confidence that financial market already firm from crisis. Bank of America retreated after first-quarter profit to trail analysts' estimates. National City tumbled as they cut its dividend and sell stock at a 40 percent discount. Schlumberger Ltd. led a rally in energy shares and limited index decline.
The Standard & Poor's 500 Index lost 2.17 points to 1,388.16. The Dow Jones Industrial Average retreated 24.34 to 12,825.02. The Nasdaq Composite Index added 5.07 to 2,408.04 as Apple Inc. climbed on raised its earnings projection by analyst.
The profit reports from Bank of America and National City increased concern that analyst may be too optimistic about credit-market conditions. Bank of America dropped 95 cents to $37.61. Earnings was down 77 percent as they set aside $6.01 billion for bad loans, $1.31 billion in trading losses and $2.72 billion in costs for uncollectible debt. National City fell $2.30 to $6.03. They said investors will buy shares for $5 each. They plans to slash its dividend to 1 cent from 21 cents and posted net loss of 27 cents a share. First Horizon National Corp. lost $1.23 to $11.83. Cleveland-based KeyCorp dropped $1.51 to $23.17. Sovereign Bancorp Inc. retreated 86 cents to $8.43. Citigroup Inc. fell 8 cents to $25.03. Analyst said they may cut or eliminate its dividend.
Wells Fargo retreated $1.13 to $29.27. Analyst cut their rating to underperform and estimate price-to-earnings ratio may fall. Caterpillar lost $1.95 to $83.33. Their rating was reduced to market perform. Sears Holdings Corp. declined $7.24 to $97.48. They said Bank of America wouldn't renew a $1 billion letter of credit but it won't affect Sears's access to cash.
Eli Lilly & Co. fell $2.48 to $49.59. Their earning trailed analysts' estimates. Mattel Inc. dropped $1.78 to $20. Their first quarterly loss miss analyst forecast on higher manufacturing costs. Analysts had expected a profit. Hasbro Inc. posted an increase in profit on sales. The shares added $3.10 to $34.65.
Apple added $7.12 to $168.16 after analysts raised their second-quarter profit estimate. Schlumberger gained $5.06 to $106.91. Their rating was raised to overweight and increased its share-price estimate to $135 from $125.
Exxon Mobil Corp. gained 26 cents to $94.26, while ConocoPhillips added 45 cents to $84.34, after rebel attacks in Nigeria reduced crude oil output.
Quest Diagnostics Inc. rose $3.50 to $49.12. They reported first-quarter earnings that topped analysts' estimates.
Currencies
The dollar traded low against the euro before an report forecast to show U.S. sales of existing homes fell last month. The euro was high against the yen after ECB said oil prices are pushing up wages, increasing the chance interest rates will stay high. The pound traded low against the euro on speculation plan to swap government bonds for mortgage securities won't be enough to revive lending.
The dollar traded at $1.5912 per euro. The euro traded at 164.41 yen. The dollar was at 103.33 yen. The dollar may fall to $1.60 per euro and 101.50 yen. Against the euro, the pound traded at 80.33 pence. The U.K. currency was little changed at $1.9805.
Norway's krone was at 4.9976 per dollar. Oil touched a record $117.83 per barrel, and traders bet the central bank will raise the 5.25 percent target lending rate by a quarter-percentage point.
Sales forecast of existing homes in the U.S. fell to 4.92 million, from 5.03 million the last month.
Sterling weakened versus the Swedish krona and the Australian dollar as the Bank of England's plan to swap 50 billion pounds of government bonds for mortgage-backed securities disappointed investors. The pound last bought 11.6676 Swedish kronor and A$2.0989. Lehman recommended that investors sell the pound against the dollar as BOE to cut its rate to 4 percent.
The dollar remained lower against the euro as Bank of America Corp. reported a 77 percent drop in first-quarter profit. The dollar rose against the euro after Citigroup Inc. reported first-quarter revenue above analysts' consensus forecasts.
Commodities
Oil
Crude oil traded above $117 a barrel after attacks cut Nigerian output and the dollar dropped against the euro. Royal Dutch Shell Plc said 169,000 barrels of oil a day was suspended because of attacks in Nigeria. OPEC should help replenish oil inventories because prices are too high.
Crude oil for May delivery rose 2 cents to $117.50 a barrel. Brent crude for June settlement rose 51 cents to $114.43 a barrel.
The dollar fell against the euro after ECB reiterated concern inflation is accelerating, increasing chances interest rates will stay. The dollar traded at $1.5909 per. The euro traded at 164.25 yen. The dollar was at 103.24 yen.
OPEC produced 32.35 million barrels of crude a day in March and kept its production targets unchanged. Shell will declare a force majeure on exports of Bonny Light crude oil as a result of the April 17 attack. Nigeria produces low-sulfur oil prized by refiners because of the proportion of high-value gasoline it yields. It was the fifth-biggest source of U.S. oil imports.
Gold
Gold rose after energy costs surged and the dollar weakened against the euro. Silver fell. Crude-oil futures jumped to a record $117.60 a barrel. The euro traded $1.5947.
Gold futures for June delivery climbed $2.40 to $917.60 an ounce. The price may trade around $940 in the next three months and fall to $920 in six months. Silver futures for May delivery tumbled 46 cents to $17.36 an ounce.
The euro rose on speculation ECB will keep its rate steady to head off inflation. The ECB has kept its benchmark unchanged at 4 percent since June.
Gold's gains may be limited as slower demand. Investment in the StreetTracks Gold Trust was unchanged at 641.8 metric tons.
Speculative long gold positions outnumbered short positions by 171,977 contracts on the Comex. As lower interest rates begin bolstering the U.S. economy, the dollar will strengthen and gold may drop to $835.
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