10 May 2010 21:40 [Source: ICIS news]
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HOUSTON (ICIS news)--US chemical stocks closed on Monday with massive gains as the Dow Jones Industrial Average rose by 405 points, up 3.9%, following large losses last week.
The rise in the Dow Jones came after news that the EU developed a bail-out plan worth €750bn ($961bn) in an attempt to contain the debt crisis in Greece.
The Dow Jones closed at 10,785, trading at a low of 10,386 and a high of 10,835.
All of the North American chemical stocks follows by ICIS were trading higher - many well above the gains posted by the Dow Jones.
Stocks rose after the EU's Economy and Finance Council (Ecofin) developed a loan package worth more than €500bn that would be allocated to cover the needs of EU members with solvency problems.
An additional €250bn would be provided by the International Monetary Fund (IMF), bringing the total to €750bn
The package came in addition to omes on top of the €110bn that had been assigned to rescue Greece as the EU member faced a debt crisis.
There had been concerns that the Greek crisis could widen, threatening both the economy of Europe and the debt of other countries, according to a report released on Friday by the American Chemistry Council (ACC).
Just as chemical stocks beat the Dow Jones during Monday's surge, they performed much worse during its sharp declines on Thursday and Friday.
On Thursday, the Dow Jones closed roughly 350 points lower after plunging by nearly 1,000 points during the day. Losses among several chemical stocks exceeded 5%.
On Friday, the Dow Jones fell by about 140 points, or 1.3%. Again, many chemical stocks performed worse.Chemical stocks were particularly exposed to the to the pessimistic market, because their performance was tied to GDP growth and early-cycle recovery.
The sell-off appeared too sharp in the case of Albemarle, a US maker of catalysts and flame retardants, according to a research note by David Begleiter, an analyst with Deutsche Bank.
During a six-day period, Albemarle shares fell by 16%, Begleiter said. The drop came despite the company presence in what Begleiter described as oligopolies for bromine and refinery catalysts.
Deutsche bank upgraded Albemarle to a buy and set a price target at $50.00, a hefty premium over the stock's $39.23 closing on Friday.
Albemarle stock rose along with its chemical peers, reaching $42.65, up 8.7%.
($1 = €0.78)
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