With the help of Financial stocks, US stock market ended higher for the second consecutive day today, Thursday, 10 January, 2008 and all the three indices closed higher simultaneously once again today. Market seemed to get the first good news of the year when news started pouring that Bank Of America is planning to acquire the much troubled Countrywide Financial, the countrys largest mortgage lender firm.
In addition to this, there was federal Reserve Chairman, Ben Bernankes speech where he clearly hinted at another interest rate cut during the end of the month. Though market went up after Fed Chiefs speech, it went down soon after but stocks soon soared as the Countrywide news hit the market. At the end, eight out of the ten economic sectors finished in positive territory. Energy and Utilities represented the day's declining sectors.
The Dow Jones industrial Average finally ended the day with a good gain of 117.8 points at 12,851.3. The Nasdaq Composite Index, finished higher by 14 points at 2,498. S&P; 500 finished higher by 11 points at 1,420.
Twenty-four out of thirty Dow stocks ended in the green today. General Motors headed the team of Dow winners and the stock today closed up by 4%.
Stocks opened on a low note, as concerns about a slow-down in consumers weighed on the market. The negative sentiment was fueled by Capital One after the company said it reduced its profit outlook due to increased loan delinquencies. December same-store retail sales disappointed, and many retailers lowered earnings guidance. Wal-Mart was an exception which topped its expectations.
Countrywide stocks end 51% higher
Countrywide Financials soared 51% after The Wall Street Journal reported that Bank of America was in advanced talks to acquire the troubled company. Bank of America closed up 1.5%. Countrywide shares had fallen as much as 90% since February 2007 as problems in subprime mortgages advanced from modest concerns into a full-blown global financial crisis.
Meanwhile, Chairman, Ben Bernanke clearly stated that necessary steps would be taken to shave off a recession. Regarding recession, Ben Bernanke responded the Fed is not currently forecasting a recession, and the expectation is for sluggish growth but he did note the downside risks to the economy.
Initial jobless claims for the week ended 5 January unexpectedly fell to 322,000 from 337,000 the prior week. But the news did not give futures much of a boost.
Indian ADRs ended mixed today. VSNL and ICICI Bank were the two main winners gaining 4.2% and 7.7% respectively.
Goldman Sachs sees recession in US and Japan
Crude prices fell back to $94/barrel today, as traders became concerned about upcoming worldwide demand. Prices fell to lowest level in almost two weeks. Some recession related comments from Goldman Sachs also pressured prices. Crude-oil futures for light sweet crude for February delivery today closed at $93.71/barrel (lower by $1.96/barrel or 2.1%) on the New York Mercantile Exchange. Prices are 74% higher on a yearly basis.
Yesterday, Goldman Sachs announced that US is already into a recession or will soon be entering one. Today, it also commented about Japan and said that there is a 50% probability of Japan hitting a recession this year. US and Japan together account for one-third of crudes total worldwide consumption.
Volume on the New York Stock Exchange topped 2 billion shares, with advancing stocks outpacing decliners more than 2 to 1. On the Nasdaq, more than 2.6 billion shares changed hands, with advancing stocks ahead of decliners by 9 to 5.
The International Trade Balance and the Import and Export Price Indices are the primary economic reports due tomorrow. December's data will help provide further insight into fourth quarter GDP.
Powered byCapital Market - Live News