Financials weigh heavy on US Market
US stocks were done with their two day winning spree and registered
substantial losses today, Tuesday, 12 August, 2008 after the financial
sector weighed extensively on the sector. Spate of negative news from
the sector pulled down stocks today though crude prices continued to
drop. The trade deficit data by the Commerce Department failed to evoke
much of positive response and stocks traded in the red for almost the
entire day. Eight of the ten sectors ended in the red. Consumer staples
and the materials sectors were the only exception.
The Dow
Jones industrial Average ended the day with a loss of 140 points at
11,642. The Nasdaq Composite Index, finished lower by 9.3 points at
2,430.3. S&P 500 finished lower by 15.7 points at 1,289.59.
twenty three out of thirty Dow stocks ended in the red today led by JP
Morgan, Citigroup and AIG. GM was one of the main Dow winners gaining
3.2%.
In the financial sector UBS reported its fourth straight
quarterly loss and said that it is separating its business divisions
into three independent units. Wachovia reported a wider second quarter
net loss in its SEC filing than was first reported. Goldman Sachs had
its earnings estimates cut by influential Oppenheimer analyst. Morgan
Stanley said it is going to repurchase $4.5 billion in auction rate
securities and the list goes on.
The Commerce Department at USA
reported today, 12 August, Tuesday, 2008 that the U.S. trade deficit
narrowed by 4.1% to $56.8 billion in June on record exports and a
decline in non-oil imports. After adjusting for inflation, June's real
trade deficit fell by 10.3% to the lowest level in 6 1/2 years, as real
exports rose 4% and real imports dipped 0.6%. Non-petroleum imports
dropped 2.2% in real terms.
The report said that the June
trade balance unexpectedly narrowed, which is expected to provide a
strong boost to third quarter GDP. Specifically, the real (price
adjusted) trade deficit fell to $39.1 billion, from $43.1 billion in
May.
All Indian ADRs ended in the red today. HDFC Bank and ICICI Bank were the largest losers shedding 5.3% and 8.2% respectively.
Trading volume was light, with 1.1 billion shares trading on the New
York Stock Exchange, where declining stocks out numbered those
advancing 2 to 1. On the Nasdaq, almost 840 million shares traded, and
decliners topped advancers 4 to 3.
At the crude market today,
crude oil fell to a 14-week low on speculation that the dollar will
strengthen against the euro, weakening the appeal of commodities as an
inflation hedge. Crude oil for September delivery fell $1.44 (1.3%) to
settle at $113.01 a barrel. It dropped to an intra day low of $112.5.
At the currency markets on Tuesday, the dollar was little changed
against the euro after rallying 4.4% this month before today. Traders
pared speculation on a rate hike by the European Central Bank later
this year, after policy makers held the benchmark rate at 4.25% on 7
Aug, 2008. The dollar index which measures the greenback against a
basket of currencies, fell to 76.14 from 76.21 in the previous day.
For tomorrow, the economic calendar features the July data for retail
sales and import and export prices. June business inventories and
energy department?s crude inventory report are scheduled to follow.
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