US Market survives a wild ride

Late reversals in Energy and Financial sectors help market register gains

After a full day of wild trading, US Market managed to close with modest gains today, Monday, 20 August, 2007. During lunch hours, Dow was trading lower by almost 100 points after being up by 50 points earlier in the day. Just after the market opened, the U.S. Federal Reserve said it added $3.5 bln in reserves via overnight repurchase agreements, another dose of soothing investor sentiments.

Market finally closed mixed with S&P 500 being the only index losing for the day, but by nominal amount. The Dow Jones Industrial Average closed higher by 42.27 points at 13121.35. Tech-heavy Nasdaq gained 3.56 points to close at 2508.59. S&P 500 lost just 0.39 points to close at 1445.55.

Eighteen out of the thirty Dow stocks closed in the green today. Alcoa, Caterpillar, Boeing, Honeywell and Citigroup were the main Dow winners today. JP Morgan, IBM, Altria and H-P were the main Dow laggards.

After the close, Capital One said it will close its struggling GreenPoint Mortgage business, resulting in 1,900 job losses due to weakness in the nation's secondary mortgage markets.

Lowe’s beat Wall Street expectations

When market opened in the morning, all the three indices opened in green. Home improvement retailer, Lowe's topping Wall Street expectations offered some early confidence. Also, the July index of leading economic indicators rose 0.4% following a 0.3% decline in June.

Lowe's today reported better than expected earnings for the second quarter but same store sales fell 2.6% from a year ago. Weak housing market conditions and a more difficult consumer environment weighed on results and this led the retailer to cut its outlook for the year.

Fed stepped in again this morning adding $3.5 bln in overnight repurchase agreements. But a sharp reversal in Financials quickly reversed market’s course of direction which had made a strong start. Reversals in Technology, Health Care and Industrials also offset a wave of bargain hunting interest.

Concerns of a widening credit crunch, left the Financial sector down for most part of the day.

Patni Computers and Sify only end in green

But later in the day, The Financial sector once again turned around to some extent. But notable turnaround was noticed in the Energy sector whose stocks went up despite crude prices slipping down. These two sectors helped market make an U-turn.

Among the Indian ADRs, all Indian ADRs ended in the red today barring Patni Computers and Sify. Patni ended up being up by 3.3% while Sify ended up by 4.8%. In the banking sector, both ICICI Bank and HDFC Bank closed down by almost 2.5%.

Meeting to promote more-stable markets tomorrow

Crude oil futures slipped today as prospects of hurricane Dean attacking Gulf of Mexico faded away. Luckily, Gulf of Mexico is supposed to be in the safe haven compared to where the hurricane has currently targeted. Natural gas and gasoline prices also fell as Dean moved away from the Gulf.

Crude-oil futures for light sweet crude for September delivery closed at $71.12/barrel (lower by $0.86/barrel or 1.19%) on the New York Mercantile Exchange. On a yearly basis, prices are 1.5% higher. Natural gas for September delivery finished the session today with a loss of 97 cents (13.8%) at $6.04 per million British thermal units on the New York Mercantile Exchange. That was the biggest one-day drop in more than four years. The contract had gained 2.7% last week.

Volume at the New York Stock Exchange hit 1.5 billion shares, with advancing stocks outpacing decliners 10 to 7. At the Nasdaq, 1.7 billion shares exchanged hands, with advancing stocks edging ahead of decliners 15 to 14.

For tomorrow, no economic report expected. Few companies, including some notable retailers (Target) are expected to report their earnings tomorrow. But the event that will garner attention will be D-Conn, chairman of the Senate Banking Committee, planning to meet Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson to discuss how to promote more-stable markets.