New home sales drop to a thirteen year low and durable goods order drop in February
Technology and Financial stocks weighed heavily on the US market sentiments today, Thursday, 27 March, 2008 and all three indices closed in the red for the day. US stocks began the day in positive territory but the major indices were restricted to the red for the entire second half today. Earnings miss from Oracle and some disappointed on the Google front were the main reasons for the technology sector to come under pressure today.
Better than expected economic data helped offset some disappointment over Oracle. Market opened in positive mood and indices swung in green during the first hour of trading. But soon market reversed its course. Nine of the ten major economic sectors finished in negative territory. Financials posted the largest loss while Utilities posted the only gain.
In the mornings session, the Dow was up by more than 25 points. At the end, The Dow Jones industrial Average ended the day with a loss of 120 points at 12,302. The Nasdaq Composite Index, finished lower by 43 points at 2,280. S&P 500 finished lower by 15 points at 1,325.
Twenty-eight out of thirty Dow stocks ended in the red today. Intel Microsoft and H-P led the group of Dow losers. The technology stocks dropped by more than 2% to 3% each. GE was one of the Dow winners for the day.
Economic reports that came out today were slightly optimistic in nature, given the current spate of data that has been currently hitting the wires. Initial jobless claims for last week fell to 366,000 from 375,000, which was slightly better than the expected. Separately, final fourth quarter GDP was left unchanged at 0.6%.
In the tech front, Oracle shares fell more than 7% after the business-software giant reported a slower-than-forecast 21% revenue rise for the third quarter, with profit increasing 30%. The company said on its call that customers got a little more cautious at the end of its quarter.
Also Google showed notable weakness today on reports that its "pay per click" number will be weak and due to having its price target cut at Lehman Brothers.
The financial sector continued to be badly hammered today after Oppenheimer cut earnings estimates for UBS and Merrill Lynch. On the other hand, Lehman Brothers cut its estimates on several banks like Citigroup, Bank of America and Wells Fargo.
Following the completion of the Fed's first Term Securities Lending Facility auction, the Fed said it will be lending $75 billion for 28 days. The bid-to-cover ratio came in at 1.15, which is the volume of bids divided by the total of funds available at auction. The stop-out rate, the lowest rate that the Fed accepted was 0.33%.
All Indian ADRs ended in red today. VSNL and Satyam were the top two losers of the day. The two ADRs gave up 6.4% and 4.2% respectively.
Crude prices shot beyond $107/barrel today as fresh tensions cropped up in Iraq and supplies from that country became uncertain. Yesterday’s report by Energy Department for last week showing that crude inventories dropped more than forecast also affected crude prices today. Crude-oil futures for light sweet crude for May delivery closed at $107.58/barrel (higher by $1.68/barrel or 1.6%) on the New York Mercantile Exchange. Crude prices are 71% higher on a yearly basis.
It was reported that a pipeline explosion took place in southern Iraq cutting supplies to the country's main export terminal. Also, clashes between Iraqi forces and militants were raging for the third-straight day.
Trading volume topped 3.9 billion shares on the New York Stock Exchange, where decliners outpaced gainers by 5 to 3. On the Nasdaq, 2 billion shares traded, and decliners topped gainers by 3 to 2.
The final fourth quarter GDP reading and Last week's jobless claims are due first thing tomorrow morning before the market opens. Other than that, a batch of Fed representatives are scheduled to speak tomorrow to discuss the U.S. economic outlook.