US Markets end higher

Mixed economic data and bond insurer’s news try to impart positive momentum

After five days of drop, US Market managed to close higher today, Wednesday, 05 March, 2008. A batch of favorable earnings reports and continued news that a bailout for the beleaguered bond insurer was imminent kept the momentum ongoing in the market. Despite that, indices slipped in the red during intra day trading and once again thorugh a late day recovery, market managed to finish with modest gains. Eight out of ten sectors ended in the green today, financials and healthcare being the only exceptions.

In other parts of the market, commodities hit a new high today as the dollar slipped to new lower levels against the euro. Crude oil closed up more than $5 up. Gold and silver prices too ended substantially higher.

At the end, The Dow Jones industrial Average ended the day with a gain of 41 points at 12,255. The Nasdaq Composite Index, finished higher by 12 points at 2,273. S&P 500 finished higher by 7 points at 1,333. Eighteen out of thirty Dow stocks ended in the green today led Chevron.

In the morning a batch of economic reports came out. The February Institute of Supply Management (ISM) Services reading came in at 49.3, which is above the 47.3 consensus. The reading is also above the prior month's reading of 44.6.

But there was some negative economic data too. The ADP Employment Report for February showed nonfarm private jobs fell by 23,000, as against a consensus that called for 18,000 jobs to be added. The results were the worst since 2003. Also, January factory orders were -2.5%, which is even with the -2.5% market was anticipating. December posted a revised 2% increase.

Much of the financial sector was today dictated by anticipation around a word that Ambac would likely be announcing a bailout after meeting with a consortium of banks. Trading of Ambac shares infact halted. But to everyone’s surprise the company just announced that it would be issuing common stock and equity units to raise capital. The stock re-opened sharply lower.

Crude prices shot up by more than $5/barrel today after Energy Department reported an unexpected drop in crude inventories last week. Prices were also fuelled by an all time low dollar against the euro and thirteen member Organization of Petroleum Exporting Countries (OPEC) cartel deciding to keep production quotas unchanged in today’s meeting. Crude-oil futures for light sweet crude for April delivery today closed at $104.52/barrel (higher by $5/barrel or 5%) on the New York Mercantile Exchange. Prices are 74% higher than a year ago. It touched a high of $104.95 today.

Volume on the New York Stock Exchange topped 1.6 billion, and advancing stocks outran those declining about 3 to 2. On the Nasdaq, 1 billion shares were exchanged, and advancing issues edged ahead of those declining, also by 3 to 3.

Tomorrow there are economic reports on the dock. February chain store sales data are scheduled for release tomorrow followed by weekly jobless claims before the market's opening. January's Pending Home Sales Index is in the midmorning hours.