Weakness in Financial and Technology sectors continue to weigh on market sentiments
The market which opened with a solid rally today, ended finally lower today, Monday, 12 November, 2007 as a sell-off in the final hour spurred from ongoing credit market concerns sent indices lower. Eight out of ten economic sectors posted losses today, headed by Financials and Technology sectors. Continued problems in the financial sector and credit-related concerns weighed on investor sentiment.
After being up by almost 105 points earlier in the day, The Dow Jones industrial Average ended with a loss today and closed lower by 55.19 points at 12987.55. The Nasdaq Composite Index, finished lower by 43.81 points at 2,584.13. S&P 500 finished lower by 14.52 points at 1,439.18.
Fourteen out of thirty Dow stocks ended in green headed mainly by Wal-Mart, Citigroup and Johnson & Johnson. Exxon Moil, Boeing, Alcoa, and Caterpillar remained the main Dow laggards.
Citigroup shares lent the financial sector some support today after reports that an agreement was reached last Friday, 9 November, among the nation's three largest banks on the structure of a $75 billion fund to support distressed securities.
Among major news in the Technology sector, IBM announced a $5 billion all-cash offer to acquire Canadian software company Cognos. Though IBM shares gained for the day, weakness in Apple and Google shares continued for the fourth consecutive day. Merrill Lynch downgrading Microsoft made the situation further worse.
E*Trade Financial shares shed almost 60%
Nasdaq remained the most affected today, mainly because of E*Trade Financial. There were reports in the market that company could face bankruptcy. E*Trade gave up almost 60% of its share price in today’s trading. Last week, the company announced it had observed continued declines in the fair value of its $3 billion asset-backed securities portfolio. The company stated that it expected the declines in fair value to result in further securities write-downs in the fourth quarter.
New York Stock Exchange volume topped 1.7 billion, with declining stocks ahead of those advancing more than 2 to 1. On the Nasdaq, more than 2.8 billion shares traded hands, with declining stocks pulling ahead of those advancing by about 3 to 2.
All Indian ADRs ended in red today. HDFC Bank was the main loser shedding more than 8%. It was followed by ICICI Bank and Infosys Tech who gave up 4.6% each.
All eyes set on Wal-Mart and Home Depot earning reports
Crude oil prices fell today and closed almost $2/barrel lower as The Organization of Petroleum Exporting Countries (OPEC) spoke out and dollar rebounded against most of its rival currencies barring the yen. Prices fell after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December.
Crude-oil futures for light sweet crude for December delivery closed at $94.62/barrel (lower by $1.7/barrel or 1.8%) on the New York Mercantile Exchange. Prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
As per reports, Saudi Arabia’s oil minister had commented that OPEC, will discuss increasing production at its next meeting later this year. OPEC heads of state are reported to gather in Riyadh for a summit this weekend. The next scheduled OPEC policy meeting is on 5 December in Abu Dhabi.
Tomorrow, investors will again look for corporate financials to help set the tone of trading. Dow components Wal-Mart and Home Depot are scheduled to report their results before the market open. On the economic front, Pending Home Sales for September will hit the wires at 10:00 ET followed by the Treasury Budget at 14:00 ET.