US Market drowns in losses

Triple digit trouble for the Dow

In the US stock market on Monday, 25 August, US stocks were back to their loss making mode. Trading volume was substantially light showing no conviction among buyers. Dow registered its largest drop in almost a month. Overall it was a slow news day, although there were several negative headlines out of the financial sector. All the ten sectors ended in the red today led by the financial sector.

Market opened the day in the red. It lingered in the same for the entire day. Even the better than expected housing report failed to send any positive vibes within the market. The Dow Jones industrial Average ended the day with a loss of 241.81 points at 11,386.25. The Nasdaq Composite Index, finished lower by 49.12 points at 2,365.59. S&P 500 finished lower by 25.36 points at 1,266.84.

All the thirty Dow components ended in the red today. AIG led the team being down 5.5% after Credit Suisse analysts lowered their third-quarter profit estimate and target price on the insurance giant.

The financial sector continued to be in the doldrums even today. After last week’s news, it was reported today that South Korean regulators have told the Korea Development Bank to take a cautious approach before making an acquisition of an overseas bank after the company expressed interest in Lehman Brothers.

Among economic news hitting the wires at US today, the National Association of Realtors reported today at USA that July existing home sales (U.S. single-family homes and condominiums) rose 3.1% month-over-month to a seasonally adjusted 5 million annual rate. Sales of single-family homes rose 3.1% to a 4.39 million annual pace. Condo sales rose 3.4% to 610,000 annualized. Total sales follow the 2.8% decline in June. Market expected July sales to increase 1.1% to 4.91 million.

The report also stated that existing home sales are down 13.2% year-over-year, and have an inventory supply of 11.2 months, compared to the 2007 average inventory supply of 8.9 months. The median sales price fell 1.3% month-over-month to $212,400, and is down 7.1% compared to last year.

July's inventory of unsold homes on the market rose 3.9% to a record 4.67 million units, representing a supply of 11.2 months based on the current sales pace. The inventory figures are not seasonally adjusted. A sharp increase in condo inventory accounted for the gain in July. Inventories of condos rose to a record 769,000 units.

Meanwhile, the IMF cut its forecast for 2008 and 2009 world economic growth by 20 basis points to 3.9% and 3.7%, respectively, primarily due to a worsening outlook for the eurozone.

All the Indian ADRs ended in the red today. VSNL and Infosys Technologies were were the topmost losers shedding 5% and 4% respectively.

Crude-oil futures for light sweet crude for October delivery closed at $115.11/barrel (higher by $0.52 or 0.5%) on the New York Mercantile Exchange. Prices rose to a high of $116.08 and fell to an intra day low of $113.68 during the day. Crude oil rose after Tropical Storm Gustav formed in the Caribbean Sea today; raising concern oil fields in the Gulf of Mexico may be struck.

Trade volume was particularly light. On the New York Stock Exchange, volume topped 865 million, and declining issues overtook those advancing more than 3 to 1. On the Nasdaq, nearly 593 million shares exchanged hands, and advancers topped decliners, also by a more-than-3-to-1 ratio.

For tomorrow, other than a few earning reports, July new home sales and August consumer confidence data are due tomorrow just after opening bell rings. Other than that, the minutes from the latest Federal Open Market Committee are due in the afternoon.