While you were sleeping: US healthcare reform advances; stocks fall, dollar gains

Monday 23rd November 2009

US healthcare reform cleared its first hurdle in the first test of President Barack Obama's sweeping plan to extend coverage to millions of Americans while curbing health insurers’ ability to reject coverage for pre-existing conditions.

The Democrats cast 60 votes in the 100-member Senate to open debate on the bill on Saturday, opposed by 39 Republicans with one abstention. America’s US$2.5 trillion healthcare system amounts to about 17% of the world’s biggest economy.

Republicans are trying to thwart the bill, saying it will drive up premiums and taxes.

Stocks fell on Wall Street and in Europe on Friday and the U.S. dollar strengthened amid concerns the U.S. economy will climb back to health only slowly.

The Standard & Poor’s 500 dropped 0.3% to 1091.38 and the Dow Jones Industrial Average edged down 0.1% to 10318.16. The Nasdaq Composite fell 0.5% to 2146.04.

D.R. Horton, the second largest homebuilder in the U.S., tumbled 15% to US$10.37, leading the S&P 500 lower after reporting a bigger-than-expected fourth-quarter loss of US$231.9 million, or 73 cents a share. Revenue tumbled 42%. Pulte Homes fell 3.7% to US$9.46.

Caterpillar, the heavy earth-moving equipment maker, fell 1.1% to US$57.95, leading the Dow lower. Chevron declined 0.7% to US$76.77 as the price of oil slid.

Dell Inc. tumbled about 10% to US$14.29 after posting a 54% slump in third-quarter earnings.

The VIX, Wall Street’s fear gauge, as the Chicago Board Options Exchange Volatility Index is known, fell 1.9% to 22.19.

In Europe, the Dow Jones Stoxx 600 Index fell 0.8% to 243.62, as banks and oil companies across the region weakened. Amid national benchmarks, the U.K.’s FTSE 100 fell 0.3% to 5251.41, Germany’s DAX 30 dropped 0.7% to 5663.15 and France’s CAC 40 declined 0.8% to 3729.36.

Banks fell amid concern Ukraine will struggle to make payments on its debt, hurting lenders with exposure to the east European nation.

Commerzbank declined 3.7%, the biggest decliner on the DAX, while Deutsche Bank fell 2.7%, Societe Generale declined 2.7% and Credit Agricole fell 2.4%. IBS declined 3.7%.

Royal Dutch Shell fell 1% as crude weakened.

Crude oil fell below US$77 in New York as a stronger greenback sapped demand for commodities as an alternative investment.

Crude for December delivery slipped 1% to US$76.72 a barrel on the New York Mercantile Exchange in the last day of trading for the December contract. January crude fell 0.7% to US$77.47.

Copper strengthened on Friday amid reports of labour disputes at mines in Chile and speculation demand will grow in 2010. Chile's Federation of Miners threatened to strike at BHP Billiton mines.

Copper for December delivery rose 2.7 cents to US$3.1080 a pound in New York.

Gold held near its record highs at the end of the week, trading at US$1,140.5 an ounce, having reached a record US$1,152.74 last week.

Commodity prices also fell as investors have scoured economic data for signs of a recovery that would boost global energy demand.

The Reuters/Jefferies CRB Index of 19 commodities rose 0.1% to 274.58 on Friday in New York.

U.S. Treasuries mostly weakened ahead of the auction of US$118 billion of bonds this week. Yields on short-dated Treasury bills sank below zero amid expectations the Federal Reserve will keep interest rates near zero for longer.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.4% to 75.58.

The euro weakened 0.4% to US$1.4864. The dollar traded little changed against the yen at 88.86.

U.S. markets are shut this Thursday for Thanksgiving, and many market participants in America typically take the Friday off to make a long weekend.

European Central Bank President Jean-Claude Trichet said it is premature to call the end of the financial crisis over and warned that banks may struggle to wean themselves off emergency stimulus measures around the world that have provided dirt cheap money.

Businesswire.co.nz

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