US Market witnessed sea saw trading for the entire day but ultimately ended higher for the day today, Wednesday, 27 February, 2008. The day started with a few not-so-exciting economic data. But then, Federal Reserve Chairman, Ben Bernanke today hinted that Fed in all possibility will go for another soft landing in its next meeting thereby reducing interest rates by another 50 bps. But at the same time, he once again remained cautious about the current economic condition and inflation.
The Dow Jones industrial Average ended the day with a gain of 9.3 points at 12,694. The Nasdaq Composite Index, finished higher by 8.6 points at 2,353. S&P; 500 finished lower by 1.1 points at 1,380. Fifteen out of thirty Dow stocks ended in the green today. Merck and Mac Donalds were a couple of noted Dow laggards.
In economic news, January durable good orders declined by a larger than expected amount. January durable good orders fell 5.3%, which is more than the consensus estimate that called for a decline of 4.0%. Excluding transportation, orders fell 1.6%, compared to the expected decline of 1.4%.
Also reported in the morning was that new home sales in January fell to an annualized rate of 588K, a decline from a prior reading of 605K. The number marks a 2.8% decline month-over-month. Market was expecting a slightly better reading of 600K.
A first quarter earnings loss by luxury homebuilder Toll Brothers added to further woes in the housing sector.
Regarding Chairman Bernanke's testimony at Capitol Hill today, Bernanke continued to emphasize downside risk to growth more than inflation. However, he said upside risks to inflation are greater than a month ago, noting commodity price gains. He said that this might cause an increase in the Fed's outlook on inflation.
Crude prices fell by more than a dollar today as Energy Department reported more than expected build up in crude inventories for the week that ended on 22 February, 2008. This was the seventh weekly rise in crude inventories. Crude-oil futures for light sweet crude for April delivery today closed at $99.64/barrel (lower by $1.24/barrel or 1.2%) on the New York Mercantile Exchange. Earlier in the overnight session, the April contract touched a high of $102/barrel due to slumping dollar against rivals.
EIA reported today in the weekly inventory report that crude inventories grew more than expected, rising 3.2 million barrels to stand at 308.5 million barrels in the week ended 22 February. Market was expecting an increase of 2.6 million barrels.
Volume on the New York Stock Exchange surpassed 1.4 billion, and for every seven stocks on the decline, eight were posting gains. On the Nasdaq, 1 billion shares traded hands, and decliners ran past advancers, also by 8 to 7.
Tomorrow there are economic reports on the dock. The fourth quarter preliminary GDP reading is due before tomorrow's opening followed by the jobless claims for the week ending 23 February.
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