DOW drops to six year low

Stocks at Wall Street ended in the red on Thursday, 19 February, 2009. While economic data remained largely uninspiring, the financial sector weighed on the market sentiment today and all three indices ended in the red. A mixed earning report from Hewitt Packard also weighed on investor sentiment today weakening the technology sector from the very start.

The Dow Jones Industrial Average ended lower by 90 points at 7,465, the Nasdaq closed lower by 25 points at 1,442 and the S&P 500 closed lower by 9.5 points at 778.

Six of the ten sectors ended in the red today. Consumer staples, telecom and energy were the only gainers. Citigroup, Bank of America and GE were the main Dow laggards today.

There were a number of economic reports scheduled for the day today. The Federal Reserve Bank of Philadelphia reported that the business climate for factories in the Philadelphia region worsened at the fastest rate in more than 18 years in February, 2009.

The Philly Fed index plunged from a reading of negative 24.3 for January to negative 41.3 in February, marking the lowest since October 1990. The index has fallen for 14 months out of the past 15. Readings below zero show that more manufacturing firms in the survey reported worsening conditions than reported improvements.

The Labor Department reported today that first-time claims for state jobless benefits were unchanged in the latest week, but remained at a high not seen since the early 1980s. Initial claims came in at 627,000 for the week ending 14 February, 2009. The four-week average of initial claims, which measures the underlying trend, rose by 10,500 to 619,000.

Continuing jobless claims remained at record high levels, edging closer to 5 million in the week ending 7 February, 2009. Continuing claims rose by 170,000 to 4.98 million, while the four-week average of continuing claims climbed by 92,500, to 4.83 million.

In a separate report, The Labor Department reported that U.S. producer prices in January rose for the first time since July,2008. It was mainly for the energy prices that staged a comeback and propelled the overall producer price index higher.

Producer prices for finished goods climbed by 0.8% in the month. The core PPI, which strips out food and energy prices, rose by 0.4%. Energy prices staged a huge turnaround in January, rising by 3.7% after falling 9.1% in December and 12.4% in November.

Oil prices shot up on Thursday, 19 February, 2009. Prices rose substantially after Energy Department reported unexpected drop in crude inventories for last week. Prices had been dropping in the past few sessions due to the ongoing recession concerns gripping the overall US economy and also many parts of the world. The report came a day late due to the Presidents Day holiday on Monday.

On Thursday, crude-oil futures for light sweet crude for March delivery closed at $39.48/barrel (lower by $4.86 or 14%) on the New York Mercantile Exchange. The March contract will expire tomorrow. The more active April contract rose 7.4% to $40.18. Last week, crude ended lower by 6.6%.

EIA reported today that U.S. oil inventories fell 200,000 to stand at 350.6 million barrels in the week ended 13 February, 2009. Market had expected today's report to show a buildup of crude inventories to the tune of 3 million barrels. Total products supplied over the last four-week period averaged 19.95 million barrels per day, down just 0.1% compared to the similar period last year. Excluding jet fuel, petroleum demand actually rose 1.2% from a year ago. U.S. refineries operated at 82.3% of their operable capacity last week, still a low level but up from the previous week's 81.6%.

Other than a few earning reports, the consumer price index for January is the only economic data scheduled for tomorrow.