US stocks ended sharply lower on Monday after Standard & Poor’s (S&P) revised its rating outlook on the United States to negative.
The S&P 500 Index was down 14.54 points, or 1.10 percent, at 1,305.14. The Dow Jones Industrial Average was down 140.24 points, or 1.14 percent, at 12,201.59. The Nasdaq Composite Index declined 1.06 percent.
S&P on Monday cut its outlook on the US from ‘stable’ to ‘negative’ citing nation’s very large budget deficit and rising indebtedness.
According to the rating agency, the US total government deficit fluctuated between 2 percent and 5 percent of gross domestic product (GDP) from 2003 to 2008. However, it has ballooned to more than 11 percent in 2009 and has yet to recover, S&P noted.
However, the rating agency affirmed its ‘AAA’ rating on the US saying that the economy is flexible and highly diversified.
Among the Dow components, Alcoa, JP Morgan and United Tech fell more than 2 percent, while Bank of America and Caterpillar plunged more than 3.09 percent.
Citigroup Inc. (NYSE:C) shares gained 0.96 percent to $4.46 after reporting slightly higher than expected first quarter earnings. The company reported first quarter net income of $3 billion or $0.10 per shares against analysts’ estimation of $0.09 per share.
Futures on major U.S. indices point to a slightly higher opening on Tuesday ahead of economic data including housing starts and building permits.
Futures on the S&P 500 are up 0.02 percent, futures on the Dow Jones Industrial Average are up 0.07 percent and Nasdaq100 futures are up 0.03 percent.
The Commerce Department is due to release building permits and the housing starts data for the month of March before markets open. Housing Starts are expected to gain by 9.6 percent to reach 525,000 and building permits are expected to rise by 1.1 percent to reach 540,000.
The euro advanced 0.31 percent to 1.4278 against the dollar and the yen gained 0.09 percent. Crude oil futures fell 1.02 percent to $106.03 a barrel and gold futures rose 0.16 percent.
European stock markets advanced on Tuesday as better-than-expected earnings from key companies’ buoyed sentiment.
The Stoxx Europe 600 Index gained 0.63 percent to 274.78. DAX30 advanced 33.85 points or 0.48 percent to 7,060.70 and CAC 40 gained 26.43points or 0.68 percent 3,907.67, while FTSE 100 advanced 35.15 points or 0.60 percent to 5,905.23.
LVMH gained 4 percent to 114.15 euros after the company said first-quarter sales rose 17 percent as wealthy customers bought more Givenchy handbags and Hublot watches.
Novartis AG gained 3.33 percent to 39.165 euros as the company reported first quarter net income of $2.77 billion against analysts’ estimation of $2.57 billion.
Burberry Group Plc. surged 5.49 percent after the company said its second-half revenue rose 30 percent and it expects said full-year pretax profit will be at the top end of market expectations.
Asian stock markets declined on Tuesday, following the slump in Wall Street overnight after Standard & Poor’s (S&P) revised its rating outlook on the United States to negative.
Tokyo shares ended lower, led by declines chip shares after Texas Instruments said it was contending with supply shortages as well as damage to its own factories and those of its customers in Japan. Nikkei declined 1.21 percent or 115.62 points to 9,441.03.
Renesas Electronics plunged 5.43 percent to 678 yen and Advantest Corp. declined 3.23 percent to 1,405 yen.
Exporters declined as the yen gained against euro and dollar for a fourth day. Toyota Motor declined 2 percent to 3,160 yen and Canon Inc. fell 1.79 percent to 3,555 yen, while Fanuc Corp. declined 1.75 percent to 12,890 yen.
Hong Kong’s Hang Seng index declined 309.69 points or 1.30 percent to 23,520.62 and Chinese Shanghai composite fell 1.87 percent or 57.25 points to 3,000.08, while Seoul composite declined 15.40 points or 0.70 percent to 2,122.68.
China Overseas Land & Investment Ltd. plunged 3.59 percent and China Resources enterprise Ltd. slumped 4.19 percent.
LG Display shares climbed 6.9 percent as the company issued a positive second quarter outlook. Steelmakers POSCO advanced 0.8 percent and Hyundai Steel Co. gained 0. Percent on reports of product price hikes