US Market ends mixed amid credit jitters

Morgan Stanley shares end higher despite disappointing earnings but investors cheer Chinese investment

US Market witnessed another sea saw trading day for the entire day today, Wednesday, 19 December, 2007. Dow traded within 150 point range during the entire day but ultimately ended lower for the day. Nasdaq was the only index which managed to eke out some gains at the end. Among the ten economic sectors that ended in mixed fashion, Financials, Technology, Consumer Staple and Energy – each finished in positive territory.

The Dow Jones industrial Average ended the day with a loss of 25.2 points at 13,207.27. The Nasdaq Composite Index, finished higher by 4.98 points at 2,601.01. S&P 500 finished lower by 1.98 points at 1,453.

Seventeen out of thirty Dow stocks ended in red today. While IBM and Intel were a couple of the Dow winners, Walt Disney was one of the main Dow laggards.

Morgan Stanley reported more than expected losses for the fourth quarter. The larger than expected loss was due to $5.7 billion in additional mortgage-related write-downs. But Wall Street did not react much to this news and in fact lifted the stock as news of a $5 billion Chinese investment in the company cheered investors. News of the Chinese investment has sent the company's shares up 2.8%.

VSNL remains the main winner among Indian ADRs

Homebuilder Hovnanian reported a net loss after getting hit hard by the U.S. housing slump. On the other hand, General Mills reported strong second quarter results this morning, but included a forecast for 2008 that failed to meet analysts' expectations.

Among other major news, Standard & Poor's cut its rating on ACA Capital to CCC from A. The company also said it may downgrade its ratings on bond insurers Ambac Financial Group and MBIA Inc.

Also, the Fed announced this morning that banks have borrowed the funds for 28 days at a rate of 4.65%. The auction was one of the planned auctions the Fed announced last week on 17 December to help ease the liquidity problems hindering the financial markets.

Indian ADRs ended mixed today. VSNL was the top most winner gaging more than 21%.

Crude rises after four sessions of drop

After dropping for four consecutive sessions, crude oil prices rose today. Prices increased after Energy Department reported more than expected slump in crude inventories for the week ended 14 December. The drop took the inventory level to lowest level in almost three years. Crude-oil futures for light sweet crude for February delivery closed at $91.24/barrel (higher by $1.16/barrel or 1.3%) on the New York Mercantile Exchange. Futures rose as high as $92.6 earlier in the day after the Energy Department was out with the weekly inventory report. Prices are 46% higher than the year before.

As per the weekly inventory report by the Energy Department, U.S. crude inventories fell by 7.6 million barrels to 296.9 million barrels in the week ending 14 December, the lowest since February 2005. This was the fifth straight week of drop. U.S. refineries operated at 87.8% of their operable capacity last week, down 1% from the previous week's 88.8%.

Volume on the New York Stock Exchange topped 1 billion, and declining stocks outran those advancing 3 to 1. On the Nasdaq, 1.5 billion shares exchanged hands, and declining stocks edged ahead of those advancing, also by 3 to 1.

Tomorrow, investors will focus on economic reports to set the tone of trading. The final calculation of third quarter GDP and the weekly Jobless Claims data are due before market opens. In the post lunch hours, The Philadelphia Fed Survey is expected to offer a regional assessment of manufacturing activity.