Apr 1, 2008

International Markets - 31st March 2008 - A mixed end for the US Market

A mixed end for the US Market

US Market ended mixed for the week that ended on Friday, 28 March, 2008. Barring Monday, 24 March, 2008, the major indices closed lower on all the other days of the week. Nasdaq was the only major index that managed to eke out a marginal gain for the week. Or else, Dow and S&P 500 both posted losses. Financial sector ruled the major part of the momentum of the weeks trading. Ultimately, it turned out to be the worst performing sector of this busy week.

The Dow Jones Industrial Average lost 145 points for the week. Tech - heavy Nasdaq gained 3 points. S&P 500 lost 14.3 points.

On Monday, 24 March, Bear Sterns once again brought back a smile on US Markets face after JP Morgan Chase lifted its offer to buy Bear Sterns at $10/share from its previous $2/share. This Helped Bear Sterns stock soar by more than 85% today and also gave the financial sector an overall good boost.

Also helping to set things on a positive mode on that day was the existing home sales report for February, which showed a surprising 2.9% increase from January levels - the first monthly increase in a year. After being up by almost 214 points at open, the Dow Jones industrial Average ended the day with a gain of 184 points.

Though up and down since the opening bell, the major stock indices closed a little higher on Tuesday, 25 March after the Conference Board reported U.S. consumers' confidence falling in March. Monsanto came up with strong forecast and that also led to some positive market sentiments. Nasdaq finished higher by 14.3 points and S&P 500 finished higher by 3.1 points.

But on the negative side, the S&P/Case-Shiller Home Price Index, which measures prices in 20 U.S. metropolitan areas, declined 10.7% on a y-o-y basis, the largest drop on record since the measurement began in 2001.

For the rest of the week, host of familiar issues regarding the financial sector, rising commodity prices, weak economic data and speculation that a large private equity deal involving Clear Channel Communications and general earnings concerns took indices lower.

The financial sector was badly hammered after Oppenheimer cut earnings estimates for Bank of America, Citigroup, JP Morgan Chase and Wachovia. Also, Oppenheimer cut earnings estimates for UBS and Merrill Lynch. On the other hand, Lehman Brothers cut its estimates on several banks like Citigroup, Bank of America and Wells Fargo.

Among major economic reports, new home sales fell to a 13 year low in February and there was a 1.7% drop in durable good order in USA for February. Initial jobless claims for last week fell to 366,000 from 375,000, which was slightly better than the expected. Separately, final fourth quarter GDP was left unchanged at 0.6%.

Oracle reported a slower-than-forecast 21% revenue rise for the third quarter, with profit increasing 30%. The company said on its call that customers got a little more cautious at the end of its quarter.

Ultimately on Friday, 28 March, 2008, indices once again ended in the red after retailer JC penny reduced its first quarter guidance which ends in April.

With trading on Monday, 31 March, the first quarter will come to an end and the US stock market is set for its largest quarterly decline since 2002.