US stocks join the party

Wall Street takes cue from Asian stocks overnight

The new Chinese stimulus plan, gave a good boost to stocks at Wall Street today, Wednesday, 04 March, 2009 and US stocks ended with good gains today. The rally was induced by some sort of strength witnessed in the overseas market overnight. China's stimulus package to bolster its economy is perhaps being witnessed as a way to save the world from the ongoing recession. Economic reports disappointed as expected at Wall Street today. But stocks seem to have discounted these things already.

Market started the day in the green and remained quite strong for the day though ended off its session highs. The Dow Jones Industrial Average ended higher by 149 points at 6,875, the Nasdaq closed higher by 32 points at 1,353 and the S&P 500 closed higher by 17 points at 712. Indices would have fared better but for GE, whose shares tumbled 20%.

Eight of the ten sectors in the green led by materials and energy sectors. But financials, which had started the day on a strong note, ended in the red. With today's gain, market ended its five day losing streak.

Shares of GE plummeted today as investors panicked that the company may lack the capital to maintain its AAA credit rating despite lowering its dividend.

At Wall Street today, the ADP employment index reported that the U.S. labor market worsened in February, as private-sector firms cut 697,000 jobs in February,2009. The drop in ADP index was the largest ever, dating back to 2001. January's loss was revised sharply lower to 614,000 from 522,000 reported a month ago.

In a separate report, the Institute for Supply Management reported that U.S. nonmanufacturing sectors contracted at a faster pace in February as the global slowdown continued to take its toll. The ISM non-manufacturing index fell to 41.6% in February from 42.9% in January as survey respondents' comments reflected concern about financing and general weak economic conditions.

Federal Reserve's Beige Book garnered very less attention today. According to the Fed's Beige Book, the Fed does not expect a significant economic recovery until late 2009 or early 2010.

Weekly inventory report by the Energy Department and China's stimulus plan pushed crude prices higher for the second straight day on Wednesday, 04 March, 2009. Oil prices once again rose today in synchronization with stocks at Wall Street today. On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $45.38/barrel (higher by $1.5 or 8.9%) on the New York Mercantile Exchange. Last week, crude ended higher by 12%. For the month of February, crude prices had ended higher by 1.5%.

The EIA reported today that U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended 27 February, 2009. Market was expecting an increase of 2.2 million barrels. U.S. refiners operated at 83.1% of their operable capacity last week, up from the 81.4% a week ago.

Tomorrow there are quite a few economic reports scheduled. Economic data for tomorrow include revised fourth quarter productivity, weekly new unemployment claims and January factory orders. Other than that, retailers will be in focus as they report their February same-store sales results.