Wall Street perhaps witnessed its worst January in years as the month ended with fourth consecutive losses for the week on Friday, 30 January, 2009. But the technology sector supported the Nasdaq which managed to end almost unchanged. Earning reports and corporate layoffs dominated the week which incurred majority of the losses in the later part of the week. The earning reports that checked in were disappointing in most cases as expected. Fourth quarter GDP in US shrank the maximum in last twenty-eight years, though the data was better than what was feared.
The Dow Jones Industrial Average lost 76.7 points (0.9%) for the week to end at 8,000.86. Tech - heavy Nasdaq lost 0.87 points (0.1%) to end at 1,476.42. S&P 500 lost 6.07 points (0.7%) to end at 825.88.
During the week, The Federal Open Market Committee kept its interest rate target in a range of zero to 0.25%, as expected. It said it would continue to flood the financial system with money. Regarding the economy, the Fed admitted that the economy was in worse shape than in its prior meeting in December. But a gradual recovery will begin later this year. The central bank stressed that deflation was the biggest concern
The Fed also stated it continues to purchase large quantities of agency debt and mortgage-backed securities. Such a move helps put cash back into the system, and helps support the mortgage and housing markets. The FOMC stated it is prepared to purchase longer term securities if evolving circumstances indicate that it would be effective in improving conditions in credit markets.
The week kicked off on a positive note with the report that existing home sales rose 6.5% in December versus the prior month. Another report also showed that leading indicators were up 0.3% in December.
But on the other side, consumer confidence hit a record low while continuing claims for jobless benefits hit a record high. Durable orders fell for the fifth straight month and new home sales fell to an annual rate of 331,000 units in December that was the lowest on record dating back to 1963.
But it was a job loss Monday for the Street. More than 50,000 job cuts were announced across the country in one single go making investors anticipate that there will be a half million job losses reported for January, 2009 when Labor Department reports the job data next week.
Among major accompanies announcing job cuts were Caterpillar, Sprint, GM and Home Depot. The companies announced layoffs to the tune of 20,000, 8,000, 2000 and 7,000 respectively.
Job losses came from overseas as well, with Philips Electronics, Europe's biggest consumer electronics firm, saying it would lay off 6,000 workers. It also reported its first quarterly loss in five years. Steel giant Corus Group said it would cut 3,500 jobs around the globe, with most, or about 2,500, coming in Britain.
In the US on Friday, 30 January, 2009, stocks ended substantially lower. The Dow Jones Industrial Average ended lower by 148 points at 8,000, the Nasdaq closed lower by 31 points at 1,476 and the S&P 500 closed lower by 19 points at 826.
Among major economic reports for the day, there were quite a few of them. But the most important one was when the Commerce Department reported that the U.S. economy contracted at a 3.8% annualized rate in the fourth quarter, a decline that would have been worse except that the government counts an unwanted buildup of goods on store shelves as growth. Adjusted, gross domestic product contracted at a 5.1% pace in the final three months of 2008, the weakest in 28 years. But still it was less bad than feared.
In the earning arena, online retailer Amazon.com bested earnings estimates. Oil giant Exxon Mobil also posted better-than-expected earnings, even though lower crude oil prices weighed on results. Consumer staples giant Procter & Gamble met analysts' estimates, and offered an in-line outlook. Industrial outfit Honeywell also met expectations and guided in-line with analyst forecasts.
Caterpillar reported earnings results that missed the consensus estimate. It also issued downside guidance and plans to cut roughly 20,000 jobs. On the other hand, another Dow component, McDonald's reported earnings per share results that surpasses consensus forecast and later indicated that global comparable sales continue to be strong in January.
During the week, the House passed its version of an $819 billion stimulus bill in a decidedly partisan vote. The Senate will reportedly vote on its stimulus proposal in the coming week.
Among acquisition news, Pfizer announced that it is acquiring Wyeth for $68 billion, or $50.19 per share. The offer comes as a 29% premium to Wyeth's last closing.
On Friday, crude-oil futures for light sweet crude for March delivery closed at $41.68/barrel (higher by $0.24 or 0.6%) on the New York Mercantile Exchange. Earlier during the day, it touched a high of $43.44. For the week, crude prices ended lower by 10%. In January, 2009, crude shed 14%.
For the year 2009, Dow, Nasdaq and S&P 500 are down by 8.8%, 6.4% and 8.6% respectively.
0 comments:
Post a Comment