Mild losses for the US Market

Dow pares most of its losses in the final hour of trading

US market managed to end modestly higher on Monday, 29 December, 2008. Trading volume remained relatively light due to the ongoing holiday mood in the market. Even after being down by almost 170 points earlier during the day, stocks pared most of their losses and ended modestly lower at Wall Street. Higher crude price and a deal-blowout have acted as negative catalysts in the market. Weakness in the financial sector was noteworthy today.

On Wall Street, the Dow Jones industrial average ended lower by 31 points at 8,483, the Nasdaq closed lower by 20 points at 1,510.9 and the S&P 500 closed lower by 3.4 points at 869.

The indices dropped sharply amid speculation that the merger agreement between Rohm and Haas and Dow Chemical may be renegotiated now because a Kuwaiti petrochemical outfit has put an end to a proposed multibillion dollar joint venture with Dow.

Twenty two of thirty Dow stocks ended in the red today led by GM, Citigroup and JP Morgan. Nine of the ten sectors ended in the red today. Energy was the sole gainer.

Weakness in Cisco Systems, Oracle and Microsoft took the technology sector down today.

In terms of trading volume, 877 million shares changed hands on the New York today at New York Exchange and 446 million trading on the Nasdaq. Declining issues topped advancers by nearly 2 to 1 on the NYSE and by nearly 3 to 1 on Nasdaq.

Crude prices rose for the second consecutive day on Monday, 29 December, 2008. Prices rose as tensions in the Middle East escalated. The relatively weak dollar was also the reason for the higher crude price today. On Monday, crude-oil futures for light sweet crude for February delivery closed at $40.02/barrel (higher by $2.31 or 6%) on the New York Mercantile Exchange. During intra day trading, prices touched a high of $142.05. For this year in 2008, crude prices have dropped 60%.

The strikes by Israel have heightened tensions in the Mid East region, increasing the geopolitical risk premium in the price on fears that there could be some disruption to crude supplies. As per reports, in the Gaza Strip, Israeli air strikes aimed at targets linked to militant group Hamas and it continued for a third day. Hamas said 300 Palestinians have died since Saturday.

At the currency market on Monday, the dollar was down against most major counterparts. The dollar index lost 0.24% today.

Tomorrow, economic data highlights include the October S&P/CaseShiller home price composite will be released followed by the December Chicago Purchasing Manager Index. December consumer confidence is due for release at 10:00 AM ET.