Losses continue to cumulate at US Market

Negative news regarding government sponsored enterprises provoke traders to take money off the table

Stocks at Wall Street ended lower on Monday, 18 August, 2008 after traders once again turned their attention to government-sponsored enterprises Fannie Mae and Freddie Mac. Stocks ended significantly lower despite crude prices slipping further. Eight of the ten sectors ended in the red led by the financial sector. Utilities were one of the gainers.

The major indices pushed lower after opening in positive ground. Only the Dow had avoided falling into the red while opening today. But then, crude prices rose in-between driving all the three indices into the red. From there, market failed to recover. The Dow Jones industrial Average ended the day with a loss of 180.51 points at 11,479.39. The Nasdaq Composite Index, finished lower by 35.54 points at 2,416.98. S&P 500 finished lower by 19.6 points at 1,278.6.

It was reported in an article in newsweekly Barron’s earlier during the weekend that suggested that the Treasury might need to recapitalize the duo sooner rather than later. This led to further worries in the already troubled financial sector and gave traders a good excuse to take money off the table.

All the thirty Dow stocks ended in the red today led by Banc of America, Citigroup, American Express and GM. The financial stocks witnessed drop to the extent of 3% to 7%.

In the earnings section, Lowe's posted better-than-expected earnings for its second fiscal quarter. The company, however, issued a mixed outlook for its third quarter and the fiscal year. Also, BHP Billiton posted its sixth record full-year profit and offered an upbeat outlook.

In economic news on Monday, U.S. home builders report checked in very gloomy in August. The National Association of House Builders issued its August index around 1 pm E.T today. The NAHB/Wells Fargo housing market index remained at a record-low 16 in August. Two of the three components of the index turned higher, while the third was unchanged. At 16, the sentiment index shows that barely one-in-six builders have a good feeling about the market. The index is closely correlated with the housing starts data released by the Commerce Department, which is due tomorrow.

Barring Sify.com, all the Indian ADRs ended in the red. Rediff.com was the largest loser shedding more than 9%. Other than that, ICICI Bank and HDFC Bank shed 4.3% and 2.5% respectively.

At the crude market on Monday, crude oil fell amid signs Tropical Storm Fay will miss rigs and platforms in the Gulf of Mexico, which accounts for about a fifth of U.S. production. Crude oil for September delivery fell 90 cents (0.8%) to settle at $112.87 a barrel.

At the currency markets on Monday, the dollar started the day on a weak note but then went up strongly against the euro and other major rivals. But then, in course of the day, it lost some ground. The dollar index, which measures the greenback against a basket of currencies, fell 0.1% to 77.07. Earlier in the day, it was at 77.111, up from previous session’s close at 77.080.

Trading volumes showed 986 million shares exchanging hands on the New York Stock Exchange and 661 million trading on the Nasdaq stock market. Advancing issues topped decliners by 22 to 9 on the NYSE and by 19 to 8 on Nasdaq.

For tomorrow, Home Depot and Target are expected to report their latest earnings results. Housing starts for July are due ahead of Tuesday's opening bell followed by the Producer Price Index for July.