US markets end in a big loss

Manufacturing report and high commodity prices take entire steam out of market

US Market welcomed FY 2008 on a somber note after stocks slumped o the very first trading day of the year today, Wednesday, 02 January, 2008. A below-expected report on the manufacturing front dampened investor sentiment on the very first day. Crude prices kissing the $100/barrel mark for the first time ever weighed further on the investor sentiment. Other commodity prices, ie. gold also hit record high. Nine out of ten sectors ended in the red, the only exception being Energy sector, which got help from the soaring crude price.

The Dow's slide today marked its biggest point drop yet for the first trading day of the year, and its largest percentage decline since 198. The Dow Jones industrial Average ended the day with a huge loss of 220.86 points at 13,043.96. The Nasdaq Composite Index, finished lower by 42.65 points at 2,609.63. S&P 500 finished lower by 21.2 points at 1,447.16.

Twenty-nine out of thirty Dow stocks ended in the red today. IBM and Intel were the main Dow laggards. Intel was affected after Banc of America Securities downgraded the stock. Pfizer managed to be the day’s sole winner, registering marginal gains.

The December Institute of Supply Management (ISM) Index, a national purchasing manager survey, disappointingly dropped to 47.7, compared to November's reading of 50.8. The number also came in short of the consensus estimate of 50.5, and is the lowest level seen since April 2003. Because the number is below 50, it indicated a contraction in manufacturing.

Indian ADRs have a mixed day

In the morning, market enjoyed some god moment for a very brief period of time after the release of minutes from the Federal Reserve's 11 December meeting that suggested that the central bank sees more interest-rate cuts ahead. But the good time was very short-lived and sellers crept in.

Indian ADRs ended mixed today. ICICI Bank and Tata Motors managed to eke out some gains other than Rediff and Dr Reddys Laboratories. Tata Motors and ICICI Bank ended the day up 3.1% and 1.1% respectively. MTNL and VSNL were the main losers shedding 8.3% and 3% respectively.

Just as a reminder, for 2007, the Dow Jones Industrials average gained 6.4%, while the broader S&P 500 and the tech-heavy Nasdaq Composite gained 3.5% and 9.8%, respectively. Nasdaq was a clear winner, aided by Apple, Google and RIMM stocks.

It was day for commodities today at US Market

In the currency market today, the dollar extended losses against most major rivals, mainly against the yen after a weak Institute of Supply Management report. The ISM report said the U.S. factory sector contracted in December for the first time in nearly a year as new orders collapsed. The dollar index, which measures the greenback against a basket of six major currencies, was down about 0.8% at 75.970. Dollar lost more than 1% against the euro.

Comex Gold for February delivery rose $22 (2.6%) to close at $860 an ounce on the New York Mercantile Exchange on Wednesday, 02 January, 2008. prices touched $864.5 during intraday trading. Today’s closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.

Fresh violence in Nigeria and supply concerns pushed crude oil prices to record territory today. Crude-oil futures for light sweet crude for February delivery closed at $99.62/barrel (higher by $3.64/barrel or 3.8 %) on the New York Mercantile Exchange. Earlier, during the lunch hours, crude oil for February delivery rose $4.02 (4.2%) to $100 a barrel on the New York Mercantile Exchange, the highest since trading began in 1983.

Volume on the New York Stock Exchange hit 1.4 billion, with declining stocks outpacing those advancing about 9 to 7. On the Nasdaq, more than 2 billion stocks exchanged hands, and declining issues outran advancers 9 to 5.

Tomorrow will be another day when investors will focuss on the economic reports to set the tone of trading. November's Factory Orders are one of the major reports expected. Other than that, weekly jobless claims data are due before the market's open while the Energy Information Administration (EIA) will announce its weekly petroleum data shortly after opening bell