Apr 3, 2008

International Markets- 02 Apr 2008- Rally cools down at US Market

Rally cools down at US Market

Rallying mood took a backseat in the US Market today, Wednesday, 02 April, 2008 after Federal Reserve Chairman, Ben Bernanke clearly said he could not rule out a possible recession. Fed Chairman was testifying on the economic outlook before the Joint Economic Committee today. Six of the ten major economic sectors finished in negative territory. Telecom posted the largest loss while Energy posted the largest gain.

Dow fluctuated within a 140 point range today. For the day, The Dow Jones industrial Average ended with a loss of 45 points at 12,608.9. The Nasdaq Composite Index, finished marginally lower by 1.3 points at 2,361. S&P 500 finished lower by 2.6 points at 1,367.

Twenty out of thirty Dow stocks ended in the red today. Merck was the topmost loser while GM was the topmost Dow winner.

Market opened today in a negative mood after Fed Chairman Bernanke gave investors some pessimistic news that economic growth could become contractionary in the first half of 2008, but growth would strengthen in the second half of the year. Bernanke also noted that inflation remains a concern, though it should moderate in coming quarters, and markets remained under considerable stress.

Among separate economic reports, the ADP Employment Report indicated 8,000 jobs were added to the private sector during March. Market expected that the report would indicate a loss of 45,000 jobs. February's rate was revised to a drop of 18,000 payrolls from a drop of 23,000 payrolls.

Also, Factory orders for February fell 1.3%, which was worse than expected. January's downturn was revised upward to reflect a 2.3% downturn against January's initial reading reflecting a 2.5% downturn.

On the earnings front, Best Buy reported better-than-expected outlook and fourth-quarter results, and shares of the nation's largest electronics retailer went up 1.1%.

In the currency market today, the dollar index, which tracks the performance of the U.S. currency against other major currencies, was last down 0.25%. The dollar had firmed earlier after the ADP employment report showed that private sector jobs rose by 8,000 in March. But then it fell in the course of the day after Bernanke's testimony.

Crude prices rose today as dollar lost steam and Energy Department report showed that U.S. supplies of the motor fuel fell a third week. Market was anticipating that weekly inventory report will show crude inventories rose for the 11th time in 12 weeks as demand weakened and the same did.

Crude-oil futures for light sweet crude for May delivery closed at $104.83/barrel (higher by $3.85/barrel or 3.8%) on the New York Mercantile Exchange. Prices earlier fell by $1 below $100 during intraday trading. Crude prices are 59% higher on a yearly basis. For the year, crude is up by 9% till date. It touched a high of $111.8 on 17 March, 2008 but has slipped thereafter.

As per the inventory report by Energy Department, U.S. crude inventories rose more than expected, up 7.4 million barrels to 319.2 million barrels in the week ended 28 March against an anticipation of increase by more than 2 million barrels. Refineries operated at 82.4% of their operable capacity last week, up slightly from the previous week's 82.2%.

Volume on the New York Stock Exchange topped 4.2 billion, while more than 2 billion shares were exchanged on the Nasdaq. Advancers edged just ahead of decliners 3 to 2 on the NYSE and about 5 to 4 on the Nasdaq.

Federal Reserve Chairman Ben Bernanke will be speaking before the Senate Finance Committee regarding the collapse of Bear Stearns tomorrow morning. On the economic front, the weekly initial jobless claims are set for release before market opens. At 10:00 AM ET the market will get a read on the March ISM non-manufacturing index.