Downbeat Economic data thrash US Market

A disappointing manufacturing reports hints at a more slowing economy

In spite of opening modestly higher in the morning, US Market ended the day with considerable losses today, Thursday, 21 February, 2008. The day started on an optimistic note with the help of technology stocks but market swiftly made a reverse course after poor economic data re-ignited the fears of economic slowdown in the US. Each of the major economic sectors ended trading in the red with the energy sector posting the largest decline.

The Dow Jones industrial Average ended the day with a loss of 143 points at 12,284. The Nasdaq Composite Index, finished lower by 27 points at 2,299. S&P 500 finished lower by 17.5 points at 1,342.

Twenty-eight of thirty Dow stocks ended in the red today. GM was the main Dow laggard today. Microsoft and Intel were the only two Dow winners today.

The day started off on a positive note after Cisco was upgraded by Citigroup to buy from hold. This gave the overall technology sector a good boost. Dow was up by more than 70 points at one time. Research In Motion was also a standout, after reaffirming its fourth quarter earnings and revenue guidance, and raising its net subscription guidance.

But the downward spiral came when the Federal Reserve Bank of Philadelphia reported manufacturing in the region weakened further in February. The February Philadelphia Fed, a regional manufacturing survey, came in at -24. Economists expected a reading of -10. Since the reading is below 0, it reflects a retraction in manufacturing in the region. After this report, indices lingered in the red for the rest of the day.

Separately, January leading indicators fell 0.1%, in-line with expectations.

Among other economic reports, new unemployment claims for the week ended 16 February fell to 349,000 from the prior reading of 358,000. This was nearly in-line with expectations, so the market did not have much of a response.

Crude prices fell from their record highs today. Prices fell after an Energy Department report showed that U.S. inventories rose almost twice as much as forecast, as refineries slowed processing to perform seasonal maintenance. Crude-oil futures for light sweet crude for April delivery today closed at $98.23/barrel (lower by $1.47/barrel or 1.45%) on the New York Mercantile Exchange. Earlier in the session, the April contract it a low of $96.27 a barrel.

EIA reported today that crude inventories rose 4.2 million barrels in the week ended 15 February outstripping the increase of 3.2 million barrels that market expected. On the demand side, EIA reported motor gasoline demand has averaged 9.0 million barrels per day, or 0.5% above the same period last year. Distillate fuel demand has averaged 4.3 million barrels per day over the last four weeks, down 1.9% compared to the same period last year.

Volume on the New York Stock Exchange neared 1.4 billion with more than three stocks declining on the exchange for every one that rose. On the Nasdaq, volume topped 1 billion, and decliners ran ahead of advancing stocks more than 2 to 1.

Tomorrow there are no major economic reports on the dock. A couple of earning reports are expected.

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