17 April 2008
Good earning reports bring back cheer at US Market
Encouraging earning reports from quite a few bellwethers took US Market substantially higher today, Wednesday, 16 April, 2008 as the same also raised some hopes that the corporate profits might help the economy from avoiding any major slowdown. Other than that, crude oil reached a record high. Each of the major economic sectors finished in positive territory. Materials posted the largest increase.
Earnings surprises today came from several widely held companies, namely Intel, J.P. Morgan Chase, Wells Fargo and Coca-Cola. On the other hand, economic data were mixed in nature.
The market traded in green for the entire day and Dow was posting triple digit gains for the entire day. At the end, The Dow Jones industrial Average ended with a gain of 256.8 points at 12,619.27. The Nasdaq Composite Index, finished higher by 64.07 points at 2,350.11. S&P 500 finished higher by 30.28 points at 1,364.71.
JP Morgan, Intel, Banc of America, American Express and were the main Dow winners today. Intel shares went up by almost 6% while JP Morgan shares went up by 7%.
Other than beating earning estimate, Intel gave a reassuring outlook, which helped calm the markets fears over demand and margins. JP Morgan and Well Fargo too topped analysts expectations in terms of earning reports.
On the economic front, the Consumer Price Index (CPI) rose 0.3% and the core CPI rose 0.2%. Both matched expectations, but provided the market with some relief as they were better than feared after producer prices spiked higher.
Also, Housing starts and building permits fell by a larger than expected amount to their lowest levels since 1991. March housing starts plunged nearly 12% and Building permits decreased 5.8%, also falling to the lowest level since 1991.
Crude prices rose to record highs today as the weekly inventory report by the Energy Department countered expectation and also as the dollar fell to new lows against the euro due to mixed economic reports. The Energy Department reported that crude inventories fell unexpectedly last week while market was expecting a build up.
Crude-oil futures for light sweet crude for May delivery closed at $114.93/barrel (higher by $1.14/barrel or 1%) on the New York Mercantile Exchange. Prices touched $115.07/barrel during intra day trading. Yesterday also crude rose by more than $2 due to supply disruptions at Mexico and Nigeria. Crude prices are 85% higher on a yearly basis. For the year, crude is up by 18% till date.
EIA reported today that crude inventories fell unexpectedly, down 2.3 million barrels to 313.7 million barrels in the week ended 11 April 11. Traders expected an increase of 1.5 million barrels. This is the second week crude-inventories data countered expectations.
In the currency market today, the dollar remained under pressure against most major counterparts, notching a fresh low against the euro after mixed U.S. economic data. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 1% to 71.30.
Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange, where gainers topped decliners by 5 to 1. There were 925 million shares trading on the Nasdaq stock market, where gainers topped decliners by 3 to 1.
Tomorrow, IBM, Merrill Lynch, Pfizer, United Technologies and Nokia will lead action, reporting their latest earnings results prior to the stock market's open. Google will report after close. Other than that, the weekly jobless claims report is due followed by Leading economic indicators from March.
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