Wall Street in shambles

Investors ignore economic data and focus on Warren Buffet's comments

It was a painful day at Wall Street today, Monday, 02 March, 2009. Market kicked off the week amid a grim scenario and stocks at Wall Street ended with losses once again. Pessimistic comments from investor Warren Buffet, couple of in line economic reports and huge losses registered by AIG in its latest quarter took stocks gliding down the line. As hours passed, improvement in market sentiments was nowhere to be seen. Economic reports did little to uplift investor sentiments today at Wall Street.

The Dow Jones Industrial Average ended lower by 300 points at 6,763, the Nasdaq closed lower by 55 points at 1,322 and the S&P 500 closed lower by 34.2 points at 700. At this level, indices were at their lowest levels since December, 1996.

All ten sectors ended in the red today. Industrials, financial, energy and materials led the declines on a sectoral basis.

Stocks actually began the session in negative territory as investors reacted negatively to AIG's earning report. AIG posted a fourth quarter loss exceeding $60 billion. Reports indicate it is the largest quarterly loss in U.S. corporate history.

Among major economic reports scheduled for the day, the Institute for Supply Management reported today that its monthly purchasing managers' index rose to 35.8% in February from 35.6% in January. Readings under 50% show business is getting worse for most firms. The worsening of business came in for the thirteenth straight month.

In a separate report, the Commerce Department reported today that personal savings rate hit a 14-year high in US in January, 2009. U.S. households socked away most of the extra income they got in January from annual cost-of-living raises.

But reports just got ignored as traders focused their attention on famous investor Warren Buffet. Investor Warren Buffett stated to his shareholders in a letter that he believes the economy is in shambles, and that it will likely remain that way beyond 2009. With this, stocks just refused to come out from the dark.

Oil prices ended drastically lower on Monday, 02 March, 2009. Prices continued to fall after stocks continued to register losses at Wall Street after preliminary fourth quarter GDP report showed that the US economy contracted more than expected in US. Prices also fell due to the strong dollar. A stronger dollar pressures demand for dollar-denominated commodities, such as crude oil which become more expensive for holders of other currencies and also vice versa.

On Monday, Friday, crude-oil futures for light sweet crude for April delivery closed at $40.15/barrel (lower by $4.61 or 10.3%) 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%.

In the currency market on Monday, the dollar index, which measures the value of dollar against a basted of six weighted currencies, gained 0.7% after gaining 2.2% in February, 2009.

Tomorrow there are quite a few economic reports scheduled. Economic data for tomorrow include January pending home sales and February auto sales. Fed Chairman Bernanke is scheduled to testify at Senate Budget Committee hearing at 10:00 AM ET and Treasury Secretary Geithner scheduled to testify at a House Panel on the Federal budget at 12:30 PM ET.