Market ignores disappointing news in the financial front hoping that Federal Reserve will surely deliver tomorrow
US Market started the week on a strong note today, Monday, 10 December, 2007 after the financial sector provided good support to the broader market. Expectations that Federal Reserve will cut federal funds rate (the rate banks charge each other on overnight loans ) rates tomorrow by another twenty-five to fifty basis points bringing overall rate below 4% also imparted some fresh enthusiasm among investors. Couple of bad bews in the financial market did not disrupt today’s tone of trading. Nine out of ten economic sectors posted gains today.
The rate cut chances kept sellers at bay for almost the entire day. The Dow Jones industrial Average ended the day with a gain of 101.45 points at 13,727.03. The Nasdaq Composite Index, finished higher by 12.79 points at 2,718.95. S&P 500 finished higher by 11.3 points at 1,515.96.
Twenty-seven out of thirty Dow stocks ended in green today. Caterpillar, Mc Donalds, JP Morgan and Citigroup led the group of Dow winners. Boeing, AT&T and Pfizer were the only three Dow laggards.
McDonald's shares posted a handsome gain after the company reported an 8.2% increase in global comparable sales that exceeded the consensus estimate which called for a 4.9% increase. Caterpillar moved up on analyst comments about its strong market position in China.
Among some disheartening news in the financial sector, Swiss bank UBS announced today it will write-down $10 billion in losses on subprime lending, and expects to post a net loss in the fourth quarter.
Indian Technology ADRs register maximum gains
On the economic front, October pending home sales rose 0.6%, topping the consensus estimate that called for a drop of 1.0%. The prior reading was revised to +1.4% from +0.2%. Pending sales were down 18% on a y-o-y basis.
Indian ADRs closed mixed today but majority ended in green. Technology stocks led the way with Wipro Tech, Infosys Tech and Patni Computers scoring the maximum gains. The three stocks soared by 3.4%, 1.8% and 3.5% respectively today.
Crude prices were quite volatile at Nymex today. But prices ultimately gave up earlier gains and ended lower today. Prices rose today earlier in the day when dollar weakened against rivals but then gave up all its gains and closed lower for the day on anticipation of another interest rate cut. Crude-oil futures for light sweet crude for January delivery closed at $87.86/barrel (lower by $0.42/barrel or 0.5%) on the New York Mercantile Exchange. Prices reached a high of $89.75/barrel earlier in the day.
Volume on the New York Stock Exchange neared 1.2 billion shares, and advancing stocks outpaced those falling by a nearly 2-to-1 ratio. On the Nasdaq, 1.8 billion shares exchanged hands, and advancers topped decliners roughly 8 to 7.
Tomorrow, investors will focus on Federal Reserve's interest rate decision at its policy-setting meeting to help set the tone of trading during the session. Policymakers are widely expected to lower rates, as weakness in the housing and credit markets continue to weight on investor sentiment and the overall economy. The decision will be out at 2.15 pm E.T.