Dooms day at US Market
US Market registered steep losses today, Thursday, 26 June, 2008 and
headed for the worst June performance in almost seventy eight years.
Crude prices soaring by more than $5 at one go and analyst downgrade on
General Motors was the main reasons behind today?s steep losses.
Goldman Sachs cut its overall rating on U.S. brokerages to Neutral from
Attractive thereby taking a big toll on the overall financial sector.
All ten economic sectors posted a loss.
The Dow Jones
industrial Average ended the day with a huge loss of 358.4 points at
11,453.42. The Nasdaq Composite Index, finished lower by 79.89 points
at 2,321.37. S&P 500 finished lower by 38.82 points at 1,283.15.
Dow fell to a new 52 week low. All the thirty Dow stocks ended in the
red headed by GM which skidded by more than 10%.
Goldman Sachs
added a couple of companies to its conviction sell list. This spurred a
major sell-off in Wall Street today. The firm lowered its rating on the
broker sector and indicated Citigroup might incur additional
write-downs and may also raise more capital. It also hinted that
Merrill Lynch might raise additional capital. Goldman also cut
estimates for Dow Jones Industrials component General Motors.
Dow component GE also came under severe pressure today on reports that
the company is reportedly having difficulty finding a buyer for its
credit card business.
In terms of economic data, the final GDP
reading for the first quarter indicated the economy grew at 1%, on par
with expectations and up slightly from the previous reading. Personal
consumption expenditures were revised upward to 1.1%, while the GDP
price index came in at 2.7%.
Also, jobless claims for the week
ending 21 June exceeded expectations, totaling 384,000, though they
were unchanged from the prior week. In the housing arena, existing home
sales rose 2% m-o-m to a seasonally adjusted annual rate of 4.99
million, which was better than the expected increase of 1.2%.
Technology sector was hammered today after Research In Motion fell more
than 13% after the company disappointed investors by reporting earnings
per share results that were a penny shy of the quarterly consensus
estimate. Oracle, too, disappointed its investors with an underwhelming
forecast.
Crude futures rose by more than $5 at one shot today.
A host of factors contributed to this sudden rise. First and foremost,
the dollar weakened today. Then, Libya threatened to cut output and
also OPEC's president said prices may reach $170 by the summer.
Crude-oil futures for light sweet crude for August delivery today
closed at $139.64/barrel (higher by $5.09/barrel or 3.8%) on the New
York Mercantile Exchange. It traded as high as $140.06 during intra day
trading. This was an all time new closing price for crude.
It
was reported today that Libya may curb output because of a U.S. law
that allows terror victims to seize assets of foreign governments as
compensation. OPEC President Chakib Khelil was also reported to have
said that oil may surge as high as $170 in near months on a European
interest rate rise.
Volume on the New York Stock Exchange
topped 1.5 billion, and declining stocks outdid those advancing more
than 5 to 1. On the Nasdaq, nearly 998 million shares traded, and
decliners raced beyond advancers 11 to 3.
Economic data will be the area of focus tomorrow, with the release of the May personal income and spending report.
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