The method of the enterprising is to plan with audacity and execute with vigor.
The audacity of hope as shown by Obama has resulted in history being made in the US, with the first African-American taking charge as its new president. The US and the world had pinned lot of hopes on him even before his momentous inauguration. Now that he has formally taken the reigns at the White House, the world is watching with bated breath what change he brings, and perhaps more importantly, how fast he does it?
But, leaving aside the rhetoric and the euphoria surrounding Obama, one should focus more on the immediate issues plaguing the global economy. That’s what Wall Street seemed to have done, with the key indices down 4-6%. Bank stocks led another fall in Europe as well. Asian markets too are down 1-2%.
There is no dearth of bad news, both on corporate as well as economic front. Wipro numbers are out, and they don’t seem to be too encouraging. The December rally had raised hopes of an intermediate uptrend. However, the new year has been anything but happy so far. The last few days have proved that not all the bad news has been discounted. Today, we expect another weak day. Possibility of a pull-back appears to be slim given the grim global cues. But it can always happen.
US stocks slumped to two-month lows on Tuesday as investors looked beyond President Barack Obama's historic inauguration to the battered economy. Financial stocks plunged, falling almost 17% to match their biggest percentage decline ever.
The Dow Jones Industrial Average tumbled 4%, closing at the lowest point since Nov. 21. The Standard & Poor's 500 index plummeted 5.3% and the Nasdaq Composite index slumped 5.8%. The Dow had its worst Inauguration Day decline.
The S&P 500 Financials Index fell 17% to below its lowest closing level since March 1995 as concerns about the health of the European banks weighed on the group. Both the Dow and S&P 500 retreated to two-month lows.
The S&P 500 is off to its worst start to a year, shattering the biggest rally since World War II, as analysts cut earnings estimates by a record 83% and companies signal worse to come.
The S&P 500 is down 11% in the first 12 trading days of 2009, exceeding last year’s 9.2% drop. The decline helped erase more than two-thirds of a 24% rally since Nov. 20 as optimism that government spending would revive the economy evaporated.
In his inaugural address, Obama said: "The state of the economy calls for action, bold and swift. And we will act, not only to create new jobs but to lay a new foundation for growth."
Although Obama is a positive for the markets, his inauguration does not change the underlying issues, according to one analyst. Fourth-quarter earnings are going to be disastrous, and the company management is providing conservative or negative guidance.
Optimism about what changes the new administration will bring could fuel some stock gains over the next few weeks. However, the underlying issues remained in focus.
US earnings are currently on track to have fallen 20.2% in the fourth quarter from a year earlier, according to the latest Thomson Reuters figures.
Dow component IBM was likely to be active on Wednesday. The tech leader reported quarterly earnings late on Tuesday that rose from a year ago and topped estimates, on revenue that fell from a year ago and missed estimates. IBM shares gained 3.5% in extended-hours trading.
Intel Corp., the world’s largest chipmaker, raised the possibility of reporting a loss this quarter, ending its more than 21-year run of profitability.
On Monday, Royal Bank of Scotland (RBS) warned that it may report a loss of $41.3bn - the biggest loss in British corporate history. The news rattled investors, even as Britain announced a second bank rescue plan. Royal Bank's US shares plunged 69% on Tuesday.
A number of US companies issued weak earnings and dour forecasts.
US bank State Street warned on Tuesday that fourth-quarter earnings toppled 71% and said it could face billions of dollars in new credit losses. The company also warned that 2009 revenue and earnings will likely be flat with the previous year, missing forecasts for growth. State Street shares fell 59%.
TD Ameritrade said its first-quarter profit fell 23% and cut its outlook for the year. Shares fell 10.3%.
Dow component Johnson & Johnson reported higher quarterly earnings that beat forecasts on weaker revenue that missed forecasts. The company also forecast 2009 earnings that are short of forecasts. JNJ shares ended 1% lower.
New York Times shares fell 8% after it agreed to take an expensive $250 million loan from Mexican billionaire Carlos Slim that it will use to repay debt.
Italy's Fiat said it was taking a 35% stake in U.S. car-maker Chrysler.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.37% from 2.20% on Friday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates loosened. The 3-month Libor rate fell to 1.12% from 1.13% on Monday. Overnight Libor held steady at 0.12%. Libor is a bank-to-bank lending rate.
The dollar gained against the euro and fell against the yen. COMEX gold for February delivery rose $15.30 to settle at $855.20 an ounce.
US light crude oil for February delivery rose $2.23 to settle at $38.74 a barrel on the New York Mercantile Exchange. Gasoline prices rose one-tenth of a cent to a national average of $1.843 a gallon.
Fellow Dow component United Technologies reports quarterly results Wednesday morning, while Apple reports after the close. Also, Treasury Secretary nominee Timothy Geithner's confirmation hearing in the Senate.
Banks dropped again in Europe on Tuesday, weighing on the broader market. The pan-European Dow Jones Stoxx 600 index declined 2.1% to 185.70, as the banking sector tanked 7.3%.
The French CAC-40 index declined 2.2% to 2,925.28, while Germany's DAX 30 index fell 1.8% to 4,239.85 and the UK's FTSE 100 index closed down 0.4% to 4,091.40.
Indian market witnessed a sharp cut on Tuesday as the NSE Nifty index closed below the 2,800 mark. Key indices started off with a negative gap amid sharp falls across Asian markets. Bears continued to tighten their grip over the bourses as the day progressed.
However, a sharp bounce back was witnessed as traders covered their shorts after CERC announced that it had hiked return on equity for power units from 15.5% to 14%, which would be applicable from 2009 to 2014.
Although the spike was short lived and another bout of selling dragged the NSE Nifty index to close below the 2,800 mark.
Finally, The BSE benchmark Sensex lost 229 points to close at 9,100 and the NSE Nifty lost 49 points to close at 2,796.
Shares of Educomp nose-dived by over 6% to Rs1969 after reports surfaced that the company may have fabricated its accounts overstating its turnover and profits to boost its shares and the promoters exited when stock prices reached its peak.
According to reports, the promoters made over Rs2.5bn in the open market in trading in their own shares. The promoters held 10.8mn shares as on March 31, 2006.
The holding came down to 9.5mn shares on June 30, 2008, showing that the promoters sold more than 1.3mn shares of their company during the period between March 31, 2006 and June 30, 2008.
However, later on the Managing Director, Shantanu Prakash came out and clarified saying that rumors about directors quitting the company and promoters pledging stake, were baseless.
The promoters of the company have not pledged any share and that just 5% of their stake has been sold over three years for personal needs, added Prakash.
The stock had hit 52-week high of Rs4,799 on January 21, 2008 and a 52-week low of Rs1,515 on October 27, 2008.
Shares of KPIT Cummins surged by over 2% to Rs22.5 after the company announced results for the third quarter ended December 31, 2008.
The total revenue for Q3 FY-09 was at Rs1845.22mn, registering a yoy growth of 22.06% and net profit for Q3 FY-09 has increased by 19.36% to Rs168.66mn over the same period last year. The scrip touched an intra-day high of Rs23.4 and a low of Rs20 and recorded volumes of over 86,000 shares on BSE.
TTML have gained by 2.2% to Rs22.5. The company announced its results with a net loss of Rs (450.664)mn for the quarter ended December 31, 2008 as compared to net loss of Rs (274.255)mn for the quarter ended December 31, 2007.
The total income has increased from Rs4.595bn for the quarter ended December 31, 2007 to Rs5.158bn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs22.8 and a low of Rs21.6 and recorded volumes of over 19,00,000 shares on BSE.
Power stocks were in momentum after CERC hiked return on equity for power units from 15.5% to 14%, which would be applicable from 2009 to 2014. NTPC, Power Grid, PTC and Neyveli Lignite were among the major gainers.