Lackluster day at US Markets

Microsoft and weak economic data take stocks lower

Stocks at Wall Street modest losses on Thursday, 22 January, 2009. Microsoft and weak economic data slammed stocks earlier in the day on Wall Street today but stocks managed to pare some of their losses in the post lunch hours. A rebound in the banking stocks helped market find some foothold. But the rebound was too short-lived. Better than expected earnings from Apple after yesterday's close failed to inject any sort of momentum today morning among US stocks as had been in IBM's case.

After being down by more than 250 points earlier during the day, The Dow Jones Industrial Average ended lower by 106 points at 8,122, the Nasdaq closed lower by 42 points at 1,465 and the S&P 500 closed lower by 13 points at 827.5.

Twenty four out of thirty Dow stocks ended in the red today led by Citigroup.

In the earning arena today, Apple tried to provide support to the tech sector. The company reported better-than-expected top and bottom line results for the latest quarter. But Apple issued downside guidance.

On the other hand, tech bellwether Microsoft reported earnings which fell short of consensus earnings and revenue estimates. Microsoft will not offer earnings and revenue guidance for the balance of this fiscal year. The company also announced 5,000 layoffs. Another tech giant Intel also announced layoffs of this extent.

Among major economic reports for the day, the Labor Department reported on Thursday, 22 January, 2009 that initial weekly claims (first-time applications for state unemployment benefits) continued to climb, and rose 62,000 to a seasonally adjusted 589,000 in the week ending 17 January, 2009. Initial claims, which represent job destruction, are up 82% from the same period a year ago. The four-week average of new claims was unchanged at 519,250.

Meanwhile, the number of people collecting benefits in the week ending 10 January rose 97,000 to 4.61 million, a level that is 72% higher than in the prior year. The four-week average of continuing claims, which indicates that it is harder for displaced workers to find new jobs, rose 58,750 to 4.56 million. The insured unemployment rate remained at 3.4%.

In a separate report, the Commerce Department reported today that construction on new fell more than 15% to a seasonally adjusted annual rate of 550,000, the lowest on record. Permits to build single-family homes also fell, dropping 12.3% to 363,000 last month, while total permits including apartments dropped 10.7% to a 549,000 annual rate. The figures represented record lows for both single-family and total permits.

Building permits are considered a reliable guide to the state of the housing market, because they are less affected by weather conditions than the figures on housing starts.

For all of 2008, housing starts fell 33% to 904,000, the lowest pace of new construction since the government began keeping records in 1959. Building permits fell 36% in 2008 to 892,500. Since June, starts have plunged 49%. Since the peak of activity three years ago, starts are down 76%.

On Thursday, crude-oil futures for light sweet crude for March delivery closed at $43.67/barrel (higher by $0.12 or 0.3%) on the New York Mercantile Exchange. Last week, crude prices shed 10.6%.

EIA reported today that U.S. crude supplies rose by 6.1 million barrels to stand at 332.7 million barrels during the week ended 16 January, 2009. Market had expected a buildup of 1.9 million barrels. After the data, March crude futures tumbled $2.62, or 6%, to $40.92 a barrel in electronic trading on Globex. The EIA also reported a rise of 6.5 million barrels in gasoline supplies and a rise of 0.8 million barrels in distillate stocks for the week under review.

Other than few earning reports, there are no economic reports on the dock tomorrow.