US Market remains subdued
Stocks at Wall Street ended lower on Tuesday, 19 August, 2008. Stocks
continued to be hurt due to the credit crisis situation in the
financial sector, drop in quarterly earnings from a couple of retailers
and a batch of economic reports that were against investor sentiments.
Crude prices rising by more than 2% today also took a toll on stocks at
Wall Street. Eight of the ten sectors ended in the red today.
Though market opened modestly lower in the morning, the inflation data
followed by the bleak housing report dragged market further lower. The
Dow Jones industrial Average ended the day with a loss of 130.84 points
at 11,348.55. The Nasdaq Composite Index, finished lower by 32.62
points at 2,384.66. S&P 500 finished lower by 11.91 points at
1,266.69.
Twenty six of thirty Dow components ended in the red
led by AIG, Bank of America and American Express. AIG dropped more than
6% on reports that the company might have to raise more capital.
The Labor Department reported today that U.S. producer prices rose by a
bigger-than-expected 1.2% in July. It was driven higher by prices for
energy, food and other products. Market was looking for an increase of
0.3% in July. Excluding food and energy, producer prices rose 0.7% in
the month, which was also higher than expected. In July, energy prices
rose 3.1% and food prices climbed by 0.3%.
The report hit the
wires just before Wall Street opened in the morning. It fuelled a
sell-off among stocks and the Dow Jones Industrial Average slipped by
almost 100 points within an hour after market opened.
Also, the
Commerce Department reported today that the number of new homes
starting construction in July has sharply dropped. The number of new
single-family permits dropped to the lowest level in 26 years. Builders
are cutting back their production of new homes and trying to work off
unsold inventory. Rising foreclosures on existing homes are
complicating the builders' efforts to bring supply back down to meet
sluggish demand. Housing starts fell 11% to a seasonally adjusted
annual rate of 965,000 in July, 2008.It marked the lowest level for
housing starts in 17 years. June's starts were revised higher to a
1.084 million annual pace. Housing starts are down 29.6% in the past
year.
Among earning news, Home Depot stock slipped almost 4%
after the company reported drop in second quarter profit. Target too
reported y-o-y drop in quarterly earnings but still met investor
expectations.
Barring HDFC Bank and ICICI Bank, all the Indian
ADRs ended in the red today. Satyam was the biggest loser shedding
3.2%. HDFC Bank and ICICI Bank marginally gained 0.1% and 0.01%
respectively.
At the crude market on Tuesday, crude oil rose
more than $1 a barrel as a weakening dollar prompted investors to
purchase commodities as an inflation hedge. Crude oil for September
delivery rose $1.66 (1.5%) to settle at $114.53 a barrel.
At
the currency markets on Tuesday, the dollar index, which tracks the
greenback against a trade-weighted basket of six major currencies, was
at 76.74, down from 77.070. It climbed as high as 77.41 earlier. The
dollar weakened in the face of weak economic data.
Trading
volumes remained light, with 1 billion shares exchanging hands on the
New York Stock Exchange and 712 million shares trading on the Nasdaq
stock market.
For tomorrow, the day is quite light in terms of
economic reports and earning reports. The weekly crude inventory report
from the Energy Department is the main and only economic report
expected for the day.
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