US Market registers strong gains
The culprit of the previous two days, the financial sector, helped US
market register good gains today, Wednesday, 16 July, 2008. Turnaround
in the sector following a better than expected earning report from
Walls Fargo helped the sector register the largest one day gain in
almost nineteen years. Crude prices further dropping helped market
momentum improve a bit. Eight economic sectors finished with a gain.
Energy and utilities were the largest losers.
The indices
traded in the positive territory for the entire day. The market opened
on a modestly higher. After some early morning choppiness, the stock
market rallied to its session high as crude prices plunged. At the end,
The Dow Jones industrial Average ended the day with a gain of 276.74
points at 11,239.28. The Nasdaq Composite Index, finished higher by
69.14 points at 2,84.85. S&P 500 finished higher by 30.45 points at
1,245.36.
Wells Fargo today reported second quarter earnings
topping Wall Street's expectation. The company also raised its dividend
by 10%, indicating it is in a solid financial position despite the
current environment. The stock spiked 32% today.
On the
economic front, June inflation rose by a higher-than-expected amount
due to rising energy and food costs. Core inflation also was higher
than expectations due to larger increases in the indexes for shelter,
tobacco and smoking products, and the apparel index. Specifically, June
Consumer Price Index (CPI) rose 1.1% month-over-month, higher than the
expected increase of 0.7%. Core CPI, which excludes food and energy,
rose 0.3%, which was also higher than the consensus estimate of 0.2%.
The Labor Department also reported that Industrial production rebounded
to a 0.5% gain in June from the decline of 0.2% in May. The gain was in
part due to a 5.4% increase in the output of motor vehicles and parts
as activity resumed at plants that had been idled during the American
Axle strike. Separately, capacity utilization increased to 79.9% from
79.6%.
General Motors was one of the main Dow winners today
after being up more than 14% today. The company announced yesterday
morning a new restructuring plan to shore up capital through 2009. The
stock was also up on a better-than-expected earnings report and word
that Tracinda Corp had increased its stake in the automaker.
In
the technology front, the sector performed roughly in-line with the
market, unable to outperform despite Intel reporting earnings that
topped estimates.
Fed Chairman Bernanke today answered questions
from Housing Financial Services Committee members. He said that Fannie
Mae and Freddie Mac are adequately capitalized and in no danger of
failing. He went on to say that action by Congress is justifiable in
order to raise confidence.
Crude oil prices once again witnessed
a drop in prices for the second consecutive day today. Prices plunged
once again after government data showed a surprise increase in U.S.
petroleum inventories last week. Crude-oil futures for light sweet
crude for August delivery today closed at $134.6/barrel (lower by
$4.14/barrel or 3%) on the New York Mercantile Exchange. Earlier in the
day it fell to $132. Crude has lost $10.58 over the last two sessions,
the biggest two-day price drop since January, 1991.
EIA
reported today that U.S. crude inventories rose 3 million barrels to
stand at 296.9 million barrels in the week ended 11 July. Gains in U.S.
crude inventories got a helping hand from increased imports. Daily
crude imports averaged nearly 10.8 million barrels last week, up 1.2
million barrels from a week earlier. With the weekly gain of 3 million
barrels, U.S. crude inventories were still near the lower boundary of
the average range for this time of year.
At the currency
markets on Wednesday, the dollar reversed sharp losses taking support
from better-than-expected U.S. output data, strength on Wall Street and
sagging crude-oil futures. The dollar index which tracks the
performance of the greenback against a basket of other currencies, rose
0.3% to 71.98.
For tomorrow, Coca-Cola, Ford and JP Morgan
Chase and Nokia are some of the more widely-held companies scheduled to
announce their latest quarterly results tomorrow morning. Among
economic reports, housing starts for June and the weekly jobless claims
data are first on tomorrow's list of economic data. The Philadelphia
Fed Survey is due after the session opens.
Visit site at – http://investorline.co.in/
Newsroom - http://newsroom.investorline.co.in/
Learning Center- http://learning.investorline.co.in/
Mutual funds - http://mutualfunds.investorline.co.in/
Life Insurance - http://insurance.investorline.co.in/
Investor Journal - http://research.investorline.co.in/
Newscatcher- http://forums.investorline.co.in/
0 comments:
Post a Comment