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Date: Tuesday 19 Aug 2008

LONDON (ShareCast) - Rising oil prices, economic data and downbeat results from the retail sector guaranteed a second consecutive triple digit loss for Wall Street, taking the two-day drop to over 300 points.

US producer prices rose 1.2% in July, twice as fast as economists had anticipated, after advancing 1.8% in June. The year-on-year gain accelerated to 9.8% from 9.2% in June, representing the biggest annual gain on the index since June 1981.

Meanwhile, US housing starts in July fell 11% to an annual rate of 965,000, the lowest figure since March 1991 but higher than feared.

The Dow Jones closed 130 points lower at 11,348, the tech loaded Nasdaq Composite finished the session 32 adrift at 2,384, while the broader S&P 500 was off 11 at 1,266.

The gloomy housing starts data underlined the problems faced by Home Depot, the world’s largest home improvement retailer, which today reported a drop in revenue and earnings.

The Atlanta-based company’s net earnings from continuing operations fell to $1.2bn from $1.56bn as revenues slipped 5.4% to $20.99bn from $22.18bn. Like-for-like sales at stores open at least a year fell 7.9%, though excluding seasonal factors related to fiscal 2007 covering a 53-week period, the adjusted decline was 7.2%, the company said.

Earnings per share (EPS) dipped to 71 cents from 77 cents a year earlier, but higher than market expectations of 61 cents a share.

Office supplies group Staples said second-quarter figures could be weaker-than-expected as consumers cut-back on spending. The group said earnings during the period could fall 15% on revenue that are expected to rise around 3%. At the end of the first quarter, Staples predicted earnings per share would be flat in the second quarter. Sector peer Office Depot fell in sympathy.

Elsewhere in the retail sector, upmarket department store Saks, down 5%, suffered its largest quarterly loss in two years and cut its sales forecast for the second year, while discounter Target showed things were no better at the other end of the market, as its earnings declined for the fourth quarter in a row.

Investment bank Goldman Sachs issued a bearish assessment of American International Group (AIG), the world’s largest insurer by assets. Goldman Sachs believes AIG may be compelled to raise capital on a massive scale as a result of hits taken in the credit crunch.

Balance sheet worries hurt securities firm Lehman Brothers, after JP Morgan forecast Lehman’s could declare $4bn of credit write-downs in its third quarter results. Newspaper reports are speculating that Lehman Brothers may sell part of its investment-management business to recoup mortgage-related losses.

Oil and coal companies provide isolated pockets of cheer, with Massey Energy, Peabody Energy, Chevron and Exxon Mobil on the rise. US September crude added $1.66 to $114.53 a barrel on worries about the impact of Tropical Storm Fay on production in the Gulf of Mexico.

Better than expected quarterly sales and earnings from Hewlett-Packard, released after the close, helped it advance in extended trade.


S&P 500 - Risers
Massey Energy Co (MEE) $63.97 +7.58%
Peabody Energy Corp (BTU) $61.40 +7.55%
Cons Energy Inc (CNX) $65.10 +6.53%
Southwestern Energy (SWN) $36.63 +6.05%
Eog Resources Inc (EOG) $99.88 +5.43%

S&P 500 - Fallers
Slm Corporation (SLM) $13.01 -15.90%
Lehman Brothers Holdings (LEH) $13.10 -12.84%
M G I C Invest Cp (MTG) $7.24 -11.49%
Autonation Inc (AN) $11.05 -7.38%
Macy's Inc (M) $20.49 -6.10%

Dow Jones I.A - Risers
Chevron Corp (CVX) $84.71 +1.83%
Exxon Mobil Cp (XOM) $77.91 +1.80%
Johnson and Johnson (JNJ) $71.15 +0.08%

Dow Jones I.A - Fallers
Amer Intl Group Inc (AIG) $20.34 -5.83%
Bk Of America Cp (BAC) $28.10 -4.10%
Home Depot Inc (HD) $25.87 -4.04%
General Motors (GM) $9.97 -3.76%
American Express Inc (AXP) $36.78 -3.19%

Nasdaq 100 - Risers
Sirius Satellite Radio Inc. (SIRI) $1.47 +5.00%
Intuitive Surgical, Inc. (ISRG) $301.60 +2.93%
Steel Dynamics, Inc. (STLD) $25.23 +1.94%
Joy Global Inc. (JOYG) $66.93 +1.69%
Nvidia Corporation (NVDA) $13.42 +1.51%

Nasdaq 100 - Fallers
Staples, Inc. (SPLS) $23.23 -5.48%
Ryanair Holdings Plc ADR (RYAAY) $23.90 -5.20%
Amylin Pharmaceuticals, Inc. (AMLN) $28.35 -4.75%
Leap Wireless International, Inc. (LEAP) $40.73 -4.42%
Wynn Resorts, Limited (WYNN) $96.05 -4.32%

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