Mixed finish for US Market

The weak technology sector weighs on Nasdaq

In the US stock market on Tuesday, 26 August, US stocks ended mixed with the technology sector playing the spoilsport. Energy sector tried providing some leadership as crude prices increased. Better than expected economic reports also had some positive effect on overall market sentiment. Market opened in the red in the morning. But trading volume was the lowest for the year till date. Nevertheless, Dow and S&P 500 managed to register marginal gains. Seven of the ten sectors registered gains.

The Dow Jones industrial Average ended the day with a gain of 26.6 points at 11,412.87. The Nasdaq Composite Index, finished lower by 3.6 points at 2,361.9. S&P 500 finished higher by 4.6 points at 1,274.51.

Eighteen out of thirty Dow stocks ended in the green today. AIG and other energy stocks led the Dow winners today. The day was quite heavy on economic reports, couple of which was better than expected.

The Federal Open Market Committee (FOMC) minutes for the 5 August, 2008 meeting were released today. On that day, the FOMC had kept the fed funds rate unchanged at 2%, acknowledging both downside risk to growth and increased inflation risks. As per today’s meeting, Fed officials are concerned that inflation won't ease until 2009, but most participants anticipate moderation in the coming quarters. In general, Fed officials expect the next policy move will be to raise rates.

Among the major economic reports hitting the wires today, the Conference Board in USA reported today that July consumer confidence spiked 9.6% to 56.9 from the previous month. This was much ahead of the expected 2.1% increase to 53. U.S. consumer confidence registered consecutive month of gains in August. But the confidence level remained relatively low amid persistent concerns about jobs. As per the report, the percentage of consumers saying jobs are "hard to get" rose to 32% in August from 30.2% in July. Meanwhile, the percentage of consumers expecting business conditions to worsen over the next six months fell to 25.8% from 32.4%.

The U.S. Department of Commerce reported today that July new home sales rose 2.4% to a seasonally adjusted annualized rate of 515,000 from a downwardly revised June reading of 503,000 against an expected reading reading of 525,000. New home sales were down 35% from the prior year, but have shown some stabilization in recent months.

The report also stated that new-home sales are down 35.3% compared with a year ago. The months' supply of homes on the market fell to 10.1 months in July from 10.7 months in June. Median sales prices fell 6.3% in the past year to $230,700.

In a separate report from the Case-Shiller, it showed that U.S. home prices fell at a record rate in June. The Case-Shiller index of 20 major metropolitan areas for the month fell by 15.9% in June 2007. June's drop represents a new record decline. The report also showed that annual growth rate slowed in 11 of 20 cities in June.

The Indian ADRs ended mixed today. Tata Motors and HDFC Bank registered the largest gains with their ADRs gaining 3.4% and 3.2% respectively.

Trading volume was light, topping 856 million on the New York Stock Exchange, where advancing stocks outran those declining about 9 to 5. On the Nasdaq, 591 million shares were exchanged, while advancers topped decliners 5 to 4.

At the crude market on Tuesday, crude oil rose more than $1 a barrel on forecasts showing that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of U.S. oil production. Crude oil for October delivery rose $1.16 (1%) to settle at $116.27 a barrel

At the currency markets on Tuesday, the dollar index, which tracks the value of the dollar against a basket of other major currencies, climbed 0.6%. The index earlier traded up 1% on positive economic news at Wall Street.

For tomorrow, the economic reports expected are July Durable Goods Orders and the weekly oil inventory report.