Wall Street bleeds in losses

Dow goes back below the 9,000 mark

US Market started the day, Thursday, 06 November, in the red and gradually went further down throughout the day and ultimately ended considerably lower. Losses kept mounting at Wall Street and Dow closed down by more than 400 points. Uncertainty continued to govern trading action. Disappointing earnings results and guidance along with extremely weak same-store sales results from a host of retailers were the main reasons for today’s negative market sentiment. The market also did not get any support from energy sector as oil prices tumbled by more than 7% once again and was back below $60 today.

The Dow Jones Industrial Average ended lower by 443 points, at 8,695. The Nasdaq Composite Index, ended lower by 72 points at 1,608. S&P 500 ended lower by 48 points at 904.

All thirty Dow stocks are trading in the red today. GM led way for Dow laggards being down by more than 12%. Merck, P&G and Wal Mart are the only three Dow gainers earlier in the day but at the end, they also slipped in the red. Wal-Mart dropped the least today.

The Labor Department reported today that the number of U.S. residents collecting state unemployment benefits reached the highest level in 25 years, rising by 122,000 to a seasonally adjusted 3.84 million in the week ending 25October, 2008.

Meanwhile, the number of first-time applications for benefits fell by 4,000 to 481,000 in the week ending 1 November, 2008. The jobless claims report shows businesses are laying off workers at a rapid pace, while finding a replacement job is ever harder.

Separately, another report showed that nonfarm business productivity rose at a 1.1% annual rate in the third quarter. This was generally in-line with expectations.

Retailers came out with some truly disappointing same-store sales results for October, reflecting the weak state of the consumer. Nordstrom, Target, Macy's and Gap all reported a drop in sales from stores open at least one year. But Wal-Mart beat estimates in the current scenario.

Among earning reports for the day, Media giant News Corp reported earnings per share results that were below expectations. On the other hand, Cisco posted better-than-expected earnings per share results for the latest quarter, but expects a downturn in quarterly revenue.

Yesterday, the ADP national employment report in US had stated that nonfarm private employment declined by 157,000 in October, 2008. A drop of 100,000 was expected. The ADP report is further indication that the economy weakened substantially last month given the negative impacts of the credit crunch, housing market recession and Wall Street turmoil.

The report had also detailed that service industries lost 31,000 jobs in October, while goods-producing industries cut 126,000 jobs, including 85,000 in manufacturing. September was revised to a decrease of 26,000 from a decrease of 8,000.

Volume on the New York Stock Exchange topped 1.5 billion, with declining stocks outpacing advancers 5 to 1. On the Nasdaq, more than 1 million shares exchanged hands, with decliners outpacing advancers roughly 11 to 3.

On Thursday, crude-oil futures for light sweet crude for December delivery closed at $60.77/barrel (lower by $4.53 or 7%) on the New York Mercantile Exchange. Prices reached a low of $60.2 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 63% since then. On a yearly basis, crude price is lower by 37%. For this year in 2008, crude prices have dropped 38%.

At the currency market today, the dollar gained as much as 1.6% against a weighted basket of six major currencies after the Bank of England and the European Central Bank slashed benchmark interest rates to stimulate slumping economies. The Bank of England took drastic action earlier Thursday, slashing its key interest rate to 3% from 4.5% previously. The European Central Bank, which sets monetary policy for the 15-nation euro zone, and the Swiss National Bank also moved to cut rates by smaller amounts.

The main focus tomorrow will be the government's employment report before market opens. Following that there will be pending home sales and the wholesale trade report. Consumer credit will be released at 3:00 PM ET. Among companies due for earning reports, GM and Ford are the major names.