Apr 15, 2008

International Markets - Economic and earning worries weigh on US Market

10 Apr 2008 | 07:49

Economic and earning worries weigh on US Market

US Market opened almost flat but soon slipped into red and lingered in the red for the entire day and ultimately ended lower for the day today, Wednesday, 09 April, 2008. A positive news on Citibanks front helped market open a little bit higher but a lower guidance from United Parcel Services (UPS) weighed on the market sentiment. Higher energy cost added further to its agony. Eight out of ten sectors ended in the red today led by the consumer discretionary sector. Energy was the main winner.

Dow was down by as much as 95 points at one point during the day. At the end, The Dow Jones industrial Average ended with a loss of 49.1 points at 12,527.26. The Nasdaq Composite Index, finished lower by 26.6 points at 2,322.1. S&P 500 finished lower by 11 points at 1,354.

Twenty-one out of thirty Dow stocks ended in the red today. Bucking the trend of Dow laggards were Boeing and Citigroup. The two stocks managed to finish modestly higher due to some good news on their respective front.

It was reported today that Citigroup is close to selling $12 billion in leveraged loans and bonds to a group of private equity players.

On the other hand, Being stock closed almost 5% higher after the aircraft manufacturer said that a delay in delivery of its 787 Dreamliner to later this year doesn't change its 2008 outlook.

Indian ADRs close mixed with majority in the red

Weighing on market sentiment since the very morning was the disappointing earnings guidance from United Parcel Service. The company announced that it expects first quarter earnings which are less than markets consensus estimate. The company cited higher energy cost and tighter business conditions for this change in guidance. The announcement reflects the weakened profit environment amid broader economic challenges.

Among other economic reports of the day, February's Wholesale Inventories Report indicated an increase of 1.1%. Market was expecting an increase of 0.5%, on average.

Indian ADRs closed mixed today but majority closed in the red. Satyam Computers and Wipro Technologies were the main losers shedding 4.2% and 3.8% respectively. HDFC Bank and ICICI Bank managed to end a bit higher. The two ADRs gained 0.1% and 1.6% respectively.

Crude makes a new record for itself

Crude prices rallied strongly today as the dollar weakened against its rivals. Prices also rose after the Energy Department reported that crude inventories unexpectedly fell for the week that ended on 4 April, 2008. Gains were also seen in petroleum-products futures trading on the New York Mercantile Exchange.

Crude-oil futures for light sweet crude for May delivery closed at $110.87/barrel (higher by $2.37/barrel or 2.2%) on the New York Mercantile Exchange. Earlier in the day, prices touched a high of $112.21. It is a new all-time record for crude prices. Crude prices are 80% higher on a yearly basis. For the year, crude is up by 14.2% till date.

Trading volumes showed 1.2 billion shares exchanging hands on the New York Stock Exchange, where decliners topped gainers by 2 to 1, and 816 million trading on the Nasdaq stock market, where decliners topped gainers by 3 to 1.

Tomorrow's economic reports include the weekly initial jobless claims before the market opens which will be followed by the February trade balance. Other than that, Treasury Secretary Paulson will speak in Washington on the economy and will testify on the International Monetary Fund and World Bank before the House Appropriations Committee.