US stocks ended considerably lower today, Thursday, 1 November, 2007 after a big disappointing earning report from Exxon Mobil. A downgrade on Citigroup also weighed heavily on the financial sector and this dragged stocks for the entire day. A weak manufacturing data on the US economy made the situation further worse. All ten economic sectors posted loss today.
The Dow Jones industrial Average closed lower by a huge 362 points at 13,567. The Nasdaq Composite Index, finished lower by 64 points at 2,794. S&P; 500 finished lower by 40 points at 1,508.
The financial sector bore the burnt of the downgrade of Citigroup today by CIBC World Market. Estimates that the company will have to raise more than $30 billion by either selling assets, cutting its dividend or raising capital imparted a sense of feeling that all in still not so well in the financial market. All financial stocks Citigroup, AIG, JP Morgan and American Express ended considerably lower today losing 5%-7%.
Shares of Exxon Mobil today closed lower by almost 4%. The company announced that third-quarter income fell 10% as the rising cost of oil raised expenses. It was the worst drop in profit for the company in three years and earnings were well below market expectations.
Yesterday, Federal Reserve gave the market what it wanted when it decided to cut the fed funds rate and discount rates by 25 basis points each to 4.5% and 5% respectively. Prior to yesterday, Federal Reserve had once again cut
Manufacturing in USA expands at its slowest pace in eight months
The economic news that came in today were mixed in nature. The core PCE deflator for September and the weekly initial jobless claims were in-line with expectations. The ISM (Institute of Supply Management) Index, however, came up short of economists' forecasts.
New claims for unemployment for the week ended 27 October fell to 327,000 from 333,000 the week before.
The ISM data showed that manufacturing in USA expanded at its slowest pace since March because of tight credit and a housing downturn. The Institute for Supply Management's factory index fell to 50.9, against an expectation of 51.5.
Indian ADRs closed in the red today. HDFC Bank and ICICI Bank closed lower by 3.2% and 4.2% respectively. VSNL and MTNL were the two top most losers shedding 6.2% and 7.2% respectively.
Crude oil prices hit an all-time high of $96.24 in electronic trade, but retreated back and closed the day lower at $92.86.
Trading volumes showed 1.7 billion shares changing hands on the New York Stock Exchange and 2.5 billion on the Nasdaq market. Declining issues topped gainers 7 to 1 on the Big Board and 24 to 5 on Nasdaq.
Investors will look for incoming data to help set the tone of trading tomorrow. The Labor Department will release its October employment report at 8:30 ET. Also on the economic calendar is September Factory Orders, which will hit the wires at 10:00 ET.
Powered byCapital Market - Live News