While you were sleeping: BusinessWire overnight wrap

Tuesday 23rd September 2008

Volatility on Wall Street continued, with key benchmark indexes tumbling on concern the federal government's US$700 billion bailout won't prevent a recession in the world's largest economy.

Crude oil had a record gain, soaring 17% to US$120.92 a barrel as traders unwound positions in the final day of trading in October contracts.

The Standard & Poor's 500 Index declined 3.8% to 1207.09. The Dow Jones Industrial Average fell 3.3% to 11015.69. The Nasdaq dropped 4.2% to 2178.98.

Washington Mutual fell 22% to US$3.33 and Wachovia dropped 21% to US$14.81. Apple Inc. and Cisco Systems Inc. led tech stocks lower on prospects for weakening demand as the economy slows.

The slide in stocks failed to prompt a lift in Treasury bonds however. Bonds fell, pushing yields to a two-week high amid concern the US$700 billion bailout will undermine the US government's creditworthiness.

The yield on 10-year Treasury notes rose 6% to 3.88%. Two-year notes rose three basis points to 2.22%.

Concern about the impact of the rescue package also drove down the dollar against the euro.

The dollar fell 2.3% to $1.4808 per euro in New York. It weakened to 105.32 yen from 107.45.

Gold miner Newmont Mining was among gainers, rising 6.2% to US$44.43 as the price of gold rose above US$900 an ounce on renewed interest in the precious metal as a haven.

Gold futures for December delivery 5.1% to $909 an ounce on the New York Mercantile Exchange. Gold could reach $1,000 this week, Bloomberg News cited Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, as saying. Silver rose more than 7%.

Morgan Stanley rose 9% to $29.68 after Mitsubishi UFJ Financial Group Inc., Japan's largest bank, agreed to buy a stake of as much as 20% for US$8.4 billion. The deal would boost capital at Morgan Stanley as it moves to a full banking model. The final price of the transaction is still to be determined.

The transaction may also help Morgan Stanley survive a financial morass that sank Lehman Brothers and led to the sale of Merrill Lynch.

In Europe, the Dow Jones Stoxx 600 Index fell 2.1% to 272.35 as the price of oil gained. Carrefour SA dropped 5.6%.

German stocks also declined as oil rose. Bayerische Motoren Werke AG, or BMW, fell 3.7%. The DAX Index fell 1.3% to 6,107.75.

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