US Market manages to bounce back

JP Morgan comes to Dow’s rescue after its deep discounted buyout of Bear Sterns

US Market started the day in a nervous mood but ultimately things got better in the course of the day. It was mainly JP Morgan, which came out at the rescue of the Dow, which was the only major index to close higher today, Monday, 17 March, 2008. Wight of the ten sectors ended in the red today, barring Industrials and Telecom sectors.

Stocks plunged worldwide yesterday after Bear Stearns accepted a buyout from JPMorgan Chase to avoid collapse. But it was JP Morgan that led to Dow’s gains today after the stock went up by 10% after the news of its deep-discounted buyout of Bear Sterns at $2/share. Bear Sterns stock was down by almost 84%. The Fed will provide up to $30 billion dollars in funding to back Bear's less liquid assets. The other option for Bear was bankruptcy.

After being down by almost 200 points at open, The Dow Jones industrial Average ended the day with a gain of 21.16 points at 11,972.25. But Nasdaq and S&P 500 finished in the red today. The Nasdaq Composite Index, finished lower by 35.5 points at 2,177. S&P 500 finished lower by 11.5 points at 1,276.

Twenty two out of thirty Dow stocks ended in the green today led by JP Morgan. The financial sector was responsible for today’s afternoon recovery.

In its first weekend emergency action in almost three decades, the Federal Reserve lowered the so-called discount rate by a quarter of a percentage point to 3.25% last Sunday and also offered to lend money to some unprecedented list of firms .

All Indian ADRs ended in red today. ICICI Bank and HDFC Bank were the largest losers sheding 7.4% and 12.8% respectively.

Among economic data, Industrial production fell 0.5% in February. This was worse than the expected decline of 0.1%. Also, the New York Empire State Index, a regional manufacturing survey, fell to -22.2 from -11.7. This was worse than the expected reading of -7.4. It marks the lowest Empire reading on record since the survey started in 2001.

Also, the Commerce Department reported the U.S. current account deficit narrowed by 3% to $172.9 billion in the fourth quarter, or 4.9% of gross domestic product.

Crude prices fell by more than $4 today. Prices fell after the dollar continued to remain under pressure today after economic concerns about an ongoing recession continued to haunt the US Market. It was the biggest daily loss for crude in 17 years. Crude-oil futures for light sweet crude for April delivery today closed at $105.68/barrel (lower by $4.5/barrel or 4.1%) on the New York Mercantile Exchange. They earlier surged to $111.8 a barrel earlier in the day, the highest since trading began in 1983. Prices rose as much as $1.59 and dropped as much as $6.98 today.

Volume on the New York Stock Exchange neared 2 billion, and declining stocks outpaced those advancing 5 to 1. On the Nasdaq, more than 1.1 billion shares were exchanged, and decliners topped advancing issues 3 to 1.

Tomorrow, the market will have February's Housing Starts and Producer Price data in the morning hours. Thereafter, The Federal Open Market Committee issues its latest monetary policy statement tomorrow afternoon.