Strong gains at US Market

Auto rescue plan injects some enthusiasm in the market

US market started the week on Monday, 08 December, 2008 on a strong note. There are a couple of catalysts which triggered today's rally. First and foremost, investors found something to cheer about in the plan for stimulus package to save the US economy announced by President elect Barack Obama. The other catalyst has been the fact that Washington might soon reach a decision regarding the three auto giants in US who are seeking bailout money. All the ten sectors ended in the green today.

On Wall Street, the Dow Jones industrial average closed up 298 points at 8,934, the Nasdaq closed up by 62 points at 1,571 and the S&P 500 moved up 33 points at 909. Dow had earlier risen by almost 370 points.

Twenty three out of thirty Dow stocks ended in the green today. GM led the Dow winners. Mc Donalds and 3M were a couple of the four Dow laggards.

Over the weekend, President-elect Obama said over the weekend that he will focus on making sure an economic stimulus is large enough to get the economy moving. He also noted that he can't worry about the fiscal deficit in the short term. Obama plans to create a least 2.5 million new jobs by 2011 and launch the largest U.S. infrastructure investment since the 1950s.

It was reported today that Washington is working for a fast $15 bailout package for the automobile companies. The same gave GM and Ford a strong start today. GM shares closed 20% up today.

Job cuts continued to be in the headlines. 3M today lowered its earnings outlook for the year and said it cut almost 1,800 jobs in the fourth quarter to cut costs. Dow Chemicals announced that it will cut 5,000 jobs or 11% of its workforce.

On the positive side, McDonald's reported another solid month of sales. November comparable sales increased 7.7% worldwide and 4.5% in the U.S. But the stock slipped despite this data.

After hitting the lowest levels in past four years, crude prices ended substantially higher on Monday, 08 December, 2008. Crude-oil futures for light sweet crude for January delivery closed at $43.71/barrel (higher by $2.9 or 7.1%) on the New York Mercantile Exchange. It touched a high of $44.3 during intra day trading. Last week, prices coughed up 25%. That was the largest weekly loss for crude in past twenty five years. For this year in 2008, crude prices have dropped 49%.

Volume on the New York Stock Exchange topped 1,7 billion, and advancing stocks outpaced those declining more than 3 to 1. On the Nasdaq, 975 million shares exchanged hands, and advancers beat decliners nearly 3 to 1.

December Pending Home Sales Index scheduled for release shortly after the opening bell is the only economic report expected tomorrow.