Strong earnings report from Oracle offset impact of news of loss from Bear Sterns
It was a clear day for technology stocks at US Market today, Thursday, 20 December, 2007. Above-expected result from Oracle after yesterday’s close helped Nasdaq witness its best day in the past fortnight. The other two indices – Dow and S&P 500 too ended the day with modest gains, but Nasdaq rallied with substantial gains.
First ever quarterly loss from Bear Sterns in its eighty-four year history once again brought back the credit market jitters in the financial market. All ten sectors ended the day higher, except for the financials. Market expecting good earnings report from another tech biggie, Research in Motion (RIMM) after today’s close, helped offset the nervousness in the financial market.
The Dow Jones industrial Average ended the day with a gain of 38.87 points at 13,245.64. The Nasdaq Composite Index, finished higher by 39.87 points at 2,640.86. S&P 500 finished higher by 7.12 points at 1,460.12. While IBM and Microsoft provided good support to Dow today, Citigroup, AIG, JP Morgan continued to be Dow laggards.
Oracle shares jumped 6.4% today after the software maker posted a 35% rise in fiscal second-quarter profit, topping Wall Street's expectations. This gave overall tech sector a good boost today.
On the other hand, Bear Sterns reported a huge loss, which was a much larger loss than what analysts expected. Nevertheless, market ignored the report and the stock ended higher for the day.
Also, weighing on the financial market was the news that bond insurer, MBIA has $8.6 billion in collateralized debt obligations. The stock slumped almost 25%. Earlier this week, Standard & Poor's and Moody's affirmed their highest credit rating on MBI, but cut their outlook to negative.
Market ignores economic data
Among economic news that hit the wires today, third quarter real GDP was unchanged at a 4.9% annual growth rate. Core PCE rose 2% quarter over quarter and the GDP Price Index rose 1%. The report was just the final revision, so it did not have much of an impact on the market.
Also, the weekly initial jobless claims for the week ended 15 December rose to 346,000 from 335,000 the week before.
The other technology stocks that supported the market today were Apple, Microsoft and RIMM. After close, RIMM came out with earnings report that beat expectations.
Indian ADRs ended mixed today. Tata Motors and Infosys Technologies were the two topmost gainers, gaining more than 5% each. VSNL, yesterday which shot up by more than 20%, was today’s top loser shedding more than 5%.
Crude witnesses volatile trading
Crude oil prices went through some volatile trading range today. Prices dropped to almost $90/barrel at one end but also crossed $92/barrel at the other end. But going into close, prices closed marginally higher. Prices fell after Energy Department reported less than expected drop in natural gas inventory for the week ended 14 December. Crude-oil futures for light sweet crude for February delivery closed at $91.04/barrel (lower by $0.20/barrel or 0.2%) on the New York Mercantile Exchange.
Trading volumes showed 1.3 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion trading on the Nasdaq. Gaining issues topped decliners by 17 to 14 on the NYSE and by 18 to 11 on Nasdaq.
Tomorrow, investors will focus on economic reports to set the tone of trading. Personal Income and Outlays for November are due tomorrow tomorrow morning which includes Core Personal Consumption Expenditures (PCE), Fed’s favorite inflationary gauge. The Revised Consumer Sentiment Survey, published by the University of Michigan, is also due tomorrow.