Economic woes send US stocks lower - 27 Mar 2008
US stocks began the day in negative territory and the major indices were restricted to the red for the entire day today, Wednesday, 26 March, 2008. Weakness in the financial sector, couple of disappointing economic reports, euro rallying against the dollar and higher crude prices took its toll on the market today. Seven of the ten major economic sectors finished in negative territory. Financials posted the largest loss while Energy posted the largest gain.
The main economic reports that dampened market sentiments today were - new home sales fell to a 13 year low in February and there was a 1.7% drop in durable good order in USA for February.
In the mornings session, the Dow was down by more than 150 points. At the end, The Dow Jones industrial Average ended the day with a loss of 109 points at 12,422. The Nasdaq Composite Index, finished lower by 16 points at 2,324. S&P 500 finished lower by 11.8 points at 1,341.
Twenty-three out of thirty Dow stocks ended in the red today. Citigroup, American Express and JP Morgan led the group of Dow losers. The financial stocks dropped by more than 4% to 6% each.
The financial sector was badly hammered today after Oppenheimer cut earnings estimates for Bank of America, Citigroup, JP Morgan Chase and Wachovia.
It was reported today morning by the Commerce Department that February new home sales declined 1.8% from January to an annualized rate of 590K units. The latter was actually ahead of the 578K consensus estimate.
There were also a couple of other sad reports in the financial sector today. There were reports that private equity deal for Clear Channel Communications was on the verge of collapse. In addition there was a warning from Deutsche Bank that it might not hit its 2008 profit target.
All Indian ADRs ended in red today. Tata Motors and ICICI Bank were the two topmost losers. The two ADRs lost 5.3% and 6.8% respectively today.
In the currency market today, the dollar index, which tracks the value of the greenback against a basket of major currencies, fell 0.5% to 71.726. The dollar came under renewed pressure, especially against the euro, after reports showing resilient business sentiment in the euro zone's two biggest economies. Reports showed German business confidence increased in March.
Weak dollar and weekly inventory report by Energy Department for last week showing that crude inventories dropped more than forecast sent crude prices 4% higher today. Crude-oil futures for light sweet crude for May delivery closed at $105.9/barrel (higher by $4.6/barrel or 4.6%) on the New York Mercantile Exchange. Crude prices are 68% higher on a yearly basis.
The EIA reported today that U.S crude stockpiles held steady at 311.8 million barrels in the week ended 21 March. U.S. crude-oil imports averaged about 8.9 million barrels per day last week, down 570,000 barrels per day from the previous week. Refineries operated at 82.2% of their operable capacity last week, down from the previous week's 83.8%.
Volume on the New York Stock Exchange neared 3.9 billion, with declining stocks outrunning those advancing by nearly 9 to 7. On the Nasdaq, 1.9 billion shares traded, with decliners ahead of advancing issues 4 to 3.
Tomorrow, only two releases are on the economic calendar. The final revision to fourth quarter GDP and the weekly new unemployment claims are both set for release before the market opens.
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