US Market somehow dodges losses

A late day surge help indices creep back from red as crude once again soars

US Market started and ended the day in green today, Wednesday, 28 May, 2008 but the indices lingered in the red in between throughout the day. Upbeat quarterly results from a handful of retailers and a dip in crude oil prices sent stocks higher in early trading. However, oil made a rebound midmorning, prompted broad-based selling in the stock market. But a late surge helped the indices end in the green finally.

Six out of ten sectors ended the session in positive territory, led by materials sector. Financials was one of the four losers.

Among major economic news of the day in US, the Commerce Department reported that durable goods orders fell 0.5% during April, which is a less substantial downturn than market had forecast. Excluding transportation, durable goods orders increased 2.5% against an expected 0.5% downturn following the previous month’s 1.7% increase. Importantly, nondefense capital goods orders, excluding transportation, increased 4.2%.

The Dow Jones industrial Average ended the day with a gain of 45.6 points at 12,594. The Nasdaq Composite Index, finished higher by 36.3 points at 2,481. S&P 500 finished higher by 9.4 points at 1,385.3.

Seventeen out of thirty Dow stocks ended in the green today. Alcoa was the leader among Dow winners today. The decliners were led by AIG on anticipation that the company might have to raise more than $20 billion that it garnered last week.

The earning report section was dominated by retailer today. Chico's FAS and American Eagle Outfitters announced better-than-expected earnings results for the most recent quarter. Polo Ralph Lauren reported this morning an increase in sales and earnings; the company also reaffirmed its full-year outlook. Discount variety store operator Dollar Tree also reported upbeat results for its latest quarter.

Crude-oil futures rose today after the dollar strengthened and also as traders continued to speculate regarding tomorrow’s inventory report by the Energy Department. Price also rose today after speculation by Morgan Stanley that Brent crude might soon touch $150/barrel. Crude-oil futures for light sweet crude for July delivery today closed at $131.03/barrel (higher by $2.18/barrel or 1.7%) on the New York Mercantile Exchange. Oil climbed as high as $131.58 and fell as low as $125.96 today.

Traders are expecting tomorrow’s report to show that crude supplies to have climbed by 750,000 barrels for the week ended 23 May. They also expect a buildup of 800,000 barrels in distillates and an increase of 400,000 barrels in gasoline inventories. The report will come out a day late because of last Monday’s holiday.

Volume on the New York Stock Exchange topped 1.2 billion, as advancing stocks topped decliners 9 to 7. On the Nasdaq, 801 million shares were exchanged and decliners edged just ahead of decliners.

For tomorrow, the weekly unemployment claims report and the preliminary first quarter GDP reading are the first things expected. Crude oil prices will also be in the spotlight tomorrow with the release of government's weekly energy report.