US Market back in the red

Indices plunge in the final hours of trading as crude marks a new record

US Market was back in the red today, Wednesday, 07 May, 2008. Crude prices soaring above $123/barrel once again sent a vibe of negative feeling across the market. Each of the ten major economic sectors finished lower. Financials led the group of negatives.

The Dow was down by almost 70 points earlier in the day. But in the last hour of trading, indices took a massive plunge. At the end, going into close, The Dow Jones industrial Average ended the day with a loss of 206 points at 12,814. The Nasdaq Composite Index, finished lower by 44.8 points at 2,438.4. S&P 500 finished lower by 25.6 points at 1,392.7.

Twenty-four out of thirty Dow components ended in the red today. The financial stocks took the largest dips – AIG, American Express and Citigroup. Walt Disney was one of the main Dow winners.

Among major economic news of the day, first quarter nonfarm productivity rose at a 2.2% annual rate, which was more than the consensus estimate of 1.5%. Unit labor costs, an inflation gauge, registered a 2.2% rate of increase. That was better than the expected 2.6% rate of growth.

The National Association of Realtors announced in a separate report that March U.S. pending home sales fell 1.0% month-over-month on a seasonally adjusted annual rate. The decline was in-line with expectations. February sales were revised lower to a decrease of 2.8% from the previous reading, which showed a 1.9% slide.

On the earnings front, tech bellwether Cisco announced better than expected earnings after Tuesday's close. The company reported earnings topping expectations by two cents. Cisco also issued in-line guidance for its upcoming quarter and also acknowledged U.S. markets had weakened.

Walt Disney shares were up almost 3% today after the entertainment giant reported a 21% rise in profit for the second quarter of fiscal 2008.

Crude-oil futures touched a fresh record above $123 today following a U.S. government report which showed that crude supplies climbed for a third week in a row, but that refinery capacity declined. Price fell immediately after the data was released but soon it started spiraling up and closed $1.5/barrel higher for the day. Prices for crude oil have been hovering around $122 against a backdrop of disruptions to oil production in Nigeria.

Crude-oil futures for light sweet crude for June delivery closed at $123.53/barrel (higher by $1.69/barrel or 1.4%) on the New York Mercantile Exchange. Price dropped to $119 earlier during the day. In the past four sessions, crude prices have gone up by almost $11 (9.7%). For the year, crude is up by 26.7% till date.

EIA reported today that crude supplies rose 5.7 million barrels to 325.6 million for the week ended 2 May. Supplies of oil have now climbed a total of 11.9 million barrels over the past three weeks.

For tomorrow, the weekly jobless claims report is due prior to the session's start. The Wholesale Trade report for March is due subsequently.