Wall Street ends lower despite rate cut

Wall Street was up right after the Federal Reserve announced on Wednesday that it was cutting its main interest rate by half a percentage point to 3 percent, but the markets ended the session lower. The Dow Jones Industrial Average dropped 0.3 percent to 12.442.83 while the Nasdaq Composite was down 0.38 percent to 2,349 and the S&P 500 fell 0.48 percent to 1,355.81. Some analysts said, however, that the declines had more to do with investor concern over the Labor Department’s report on jobs creation and unemployment, due Friday, than it did with disappointment over the rate cuts, which also included a half-percentage-point cut to the discount rate to 3.5 percent. Among decliners on the day was drug maker Merck (NYSE: MRK), which dropped $1.32 to $46.69 after it said it has sustained losses in the fourth quarter due to its settlement of lawsuits over it painkiller Vioxx. Internet search engine Yahoo (NAS: YHOO) also saw declines, falling $1.76 to $19.05 on its report that profits were down 24 percent in the quarter and that it will lay off 7 percent of its workers. On the winning side, plastic container manufacturer Tupperware Brands (NYSE: TUP) added $5.19 to $34.55 on profits that were up 38 percent due to strong growth in North America, Asia, and Europe.

Equities markets in the Asia-Pacific region declined on Wednesday after Korean shipbuilders saw broker recommendations reduced and after one Japanese power company cut its profit forecast and others were expected to follow suit. The Taiex was down 0.43 percent to 7,543.5 while the Shanghai Composite fell 0.9 percent to 4,417.85. In Australia, the Sydney Ordinaries dropped 1.55 percent to 5,665.3 and the S&P/ASX200 was 1.71 percent lower to 5,618.7. The FTSE Straits Times Index was down 1.64 percent to 3,000.03. In India, the Sensex fell 1.84 percent to 17,758.64. Hong Kong’s Hang Seng index was 2.63 percent lower to 23,653.69 while the Kopsi index dropped 2.98 percent to 1,589.06 in South Korea.

In Tokyo, the Nikkei 225 fell 0.99 percent to 13,345.03 and the Topix index was down 0.65 percent to 1,320.11 while the Mothers market of small and mid-caps dropped 1.39 percent to 647.39. Kyushu Electric Power (TYO: 9508) cut its profit forecast by 23 percent and Deutsche Bank said that other Japanese power companies are likely to do the same. Kyushu dropped 5.5 percent to ¥2,650 while Tokyo Electric Power (TYO: 9501) was down 1.4 percent to ¥2,770. The electronics sector also saw declines on a strengthening yen, which is 7.1 percent higher in relation to the US dollar since late December. Camera and copier maker Canon (TYO: 7751; NYSE: CAJ), which makes nearly a third of its sales in the United States, fell 1.9 percent to ¥4,690 while Matsushita Electric Industrial (TYO: 6572; NYSE: MC) was down 3.3 percent to ¥2,070. Shippers, however, saw gains after Nippon Yusen (TYO: 9101) upped its net income forecast and Credit Suisse improved its recommendation to “outperform”. Nippon Yusen added 4 percent to ¥858, while Kawasaki Kisen Kaisha (TYO: 9107) was up 2.5 percent to ¥1,039 and Mitsui OSK (TYO:9104) gained 5.9 percent to ¥1,304.

European markets were lower on the session. The FTSE Eurofirst 300 was down 0.66 percent to 1,329.43. The IBEX dropped 0.22 percent in Madrid while the Dax was down 0.26 percent to 6,875.35 in Frankfurt and the Paris CAC-40 dropped 1.37 percent to 4,873.57. Banks were mixed in Paris. BNP Paribas (Euronext: BNP; TYO: 8665) was 1.1 percent lower to €66.83 after it reported that profits were down 42 percent in the fourth quarter. This report did not prevent banks from turning in the two best performances of the day on the CAC. Credit Agricole (Euronext: ACA) added 2.44 percent to €21.41 while Societe Generale (Euronext GLE) had the best day with a gain of 4.27 percent to €81.80. Other gainers on the day included builder Vinci (Euronext: DG) with a gain of 0.62 percent to €45.43. In the semiconductors sector, Infineon (FWB: IFX; NYSE: IFX) gained 5.81 percent to €6.74. Car and truck makers had the worst performances of the session on both the CAC and the Dax. Volkswagen (FWB: VOW; OTC: VLKAY) was down 1.78 percent to €153.44 while truck maker Man (FWB: EDF1) put in the worst performance of the day on the Dax as it fell 2.82 percent to €84.51. Meanwhile on the CAC, Peugeot (Euronext: UG; OTC: PEUGY) was 3.14 percent lower to €49.71 and Renault (Euronext: RNO) dropped 5.99 percent to €75.14. Among other decliners was Air France (Euronext: AF; NYSE: AKH), which was 2.96 percent lower to €19.31.

Equities markets were mixed in London. The FTSE 100 was 0.81 percent lower to 5,837.3 but the FTSE 250 added 0.03 percent to 9,908.5. Business services group Experian (LSE: EXPN) had the best day on the 100 as it added 5.75 percent to 432.5p. Other gainers included pubs operator Enterprise Inns (LSE: ETI),w hich was up 4.35 percent to 449.5p. Miners saw gains as Rio Tinto (LSE: RIO) added 3.19 percent to £48.19 on the 100 and Aquarius Platinum (LSE: AQP; ASX: AQP; JSE: AQP) gained 8.04 percent to 604.5p on the 250. Banks were lower after Citigroup reduced its price estimates for Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) and Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642). Barclays dropped 2.6 percent to 478.5p and RBS fell 3.6 percent to 385.25p, while Alliance & Leicester (LSE: AL) was down 4 percent to 672p. Insurers were also lower after the announcement that Standard Life’s (LSE: SLET) insurance head is leaving to take the position of CEO at Friends Provident (LSE: FP). Standard Life fell 1.8 percent to 224p after also saying that sales were down by 20 percent, while Friends Provident dropped 4.37 percent to 155.2p. The biggest loser on the 100 was brewer SAB Miller (LSE: SAB) with a decline of 4.55 percent to £10.87, while PartyGaming (LSE: PRTY) fell 8.77 percent to 26p for the worst day on the 250.