Mar 1, 2009

A weak finish to a strong start at US market

24 Feb 2009 | 09:05 A weak finish to a strong start at US market

Stocks at Wall Street ended substantially lower on Monday, 23 February, 2009. Dow set at its record low in twelve years. Though market opened in the green, indices slipped in the red soon. The industrial sector weighed on the market sentiment today. Concerns about the health of GE worried investors today, as is the issue of the nationalization of the banks here, mainly Citigroup. But there was no major catalyst for the plunge in US stocks today.

The Dow Jones Industrial Average ended lower by 250 points at 7,114, the Nasdaq closed lower by 53 points at 1,387 and the S&P 500 closed lower by 27 points at 743. All ten sectors ended in the red today.

While Bank of America, Citigroup and JP Morgan Chase tried to be the main Dow winners today earlier during the day, GE acted as a major laggard. But at the end, even the banking stocks also slumped.

Stocks actually began the session in positive territory as investors reacted positively to word the government might increase its stake in Citigroup to 40% by converting its existing preferred shares in Citigroup into common shares.

Among earning report for the day, Honeywell announced today that the company continues to expect first quarter earnings in-line with the consensus first quarter estimate. Though the company lowered its full-year revenue estimate, it expects full-year earnings to exceed current estimate.

The auto stocks tried providing utmost support to the market. There were reports in the market that Ford reached a tentative agreement with the UAW regarding funding for benefits. Ford is expected to be able to use a mix of cash and stock.

Oil prices ended substantially lower today. Prices had been dropping in the past few sessions due to the ongoing recession concerns gripping the overall US economy and also many parts of the world. Prices also dropped today in synchronization with the fall in stocks at Wall Street.

On Monday, crude-oil futures for light sweet crude for April delivery closed at $38.44/barrel (lower by $1.59 or 3.9%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Tomorrow is also light on earnings and economic data. The consumer confidence index is slated for tomorrow. Other than that, Fed Chairman Bernanke will provide his semiannual monetary policy report to the Senate Banking Committee.