Strong gains at US Market

A reversal in financial sector in the late hours helps US Market register strong gains

It was basically a day for earning reports today at US Market. A late surge in the financial sector helped US market register strong gains today, Tuesday, 22 July, 2008. Financial sector made a weak sector in the morning after earnings misses from Wachovia and American Express. But the sector turned around in the final hours of trading. Crude prices dropping to lowest levels in six weeks also added further momentum to this rally. Five out of ten sectors ended in the green today led by financials. But the energy sector was the worst performing sector.

The Dow Jones industrial Average ended the day with a good gain of 135.16 points at 11,602.5. The Nasdaq Composite Index, finished higher by 24.13 points at 2,303.96. S&P 500 finished higher by 17 points at 1,277.

Twenty-one out of thirty Dow stocks ended in the green today led by Banc of America, Caterpillar and Du-Pont. Merck and American Express continued to be two laggards for the second straight day.

Earlier in the day, Wachovia reported a larger-than-expected loss of $8.9 billion. The stock fell at the open but then recovered after investors were encouraged that the company plans to raise $5 billion in capital using organic measures, instead of a dilutive capital raise. The stock ended with a gain of 27%.

On the technology front, technology bellwether Apple fell almost 3% today after the maker of personal computers and iPod music players offered a weaker-than-expected outlook for its fourth quarter. Also, Texas Instruments slid 15% after the company reported a 4% profit fall and offered a disappointing third-quarter outlook.

Bank of America stock once again closed 13% higher today after the company’s the result easily topped Wall Street's forecast yesterday due to a lower-than-expected write-down of $1.2 billion.

On the same front, American Express too disappointed with its earnings and outlook.

Also in the earnings arena, strong emerging market demand helped Caterpillar increase earnings per share 40% year-over-year, topping estimates. UPS reported in-line earnings, relieving investors. The company called the economy "bleak," but kept its full year earnings forecast in-line with expectations.

In the healthcare sector, Merck reported better-than-expected results for its latest quarter, but continued concerns over its cholesterol drug Vytorin sent shares tumbling. United Health reported a 23% drop in earnings per share, but the results topped expectations.

All the Indian ADRs ended in the green today. ICICI Bank and HDFC Bank were the largest gainers with their ADRS soaring 13.1% and 9.9% respectively.

Crude-oil touched a six-week low today on forecasts that the tropical storm, Dolly, in the Gulf of Mexico will miss oil fields and refineries, easing concern about supply disruptions. The rebounding dollar also led further pressure on crude prices. Crude-oil futures for light sweet crude for August delivery closed at $127.95/barrel (lower by $3.09/barrel or 2.3%) on the New York Mercantile Exchange. It slipped by 5.41% to $125.63 earlier during intra day trading. Crude for August delivery expired today.

At the currency markets on Tuesday, the dollar index rebounded after dropping 0.3% yesterday on speculation borrowing costs may rise later this year. The dollar rose as much as 0.8% against a basket of six major currencies.

Volume on the New York Stock Exchange neared 1.6 billion shares, and advancers topped decliners more than 2 to 1. On the Nasdaq, more than 1 billion shares traded, and advancing issues outpaced those declining, also more than 2 to 1.

For tomorrow, a host of widely-held companies are scheduled to report their latest earnings results. AT&T, Boeing, ConocoPhillips, Whirlpool, PepsiCo and GlaxoSmithKline are among the many. No economic data are scheduled for release tomorrow.