Wall Street registers gains for third consecutive week

Wall Street heads for first monthly gain after a long time

With all ten sectors registering good gains for the week, US market witnessed substantial gains for the week that ended on Friday, 27 March, 2009. Treasury Secretary Geithner unveiling his plan to purchase bad assets from banks, encouraging report in the housing sector coupled with a better thane expected report in the durable goods sector gave stocks a strong start during the week. An earning report from retailer Best Buy beating Wall Street estimates just kept gains growing during the week. But downside guidance from Accenture took a toll on technology stocks hammering the indices during the last day of the week.

Nevertheless, stocks witnessed strong gains for the week. The Dow Jones Industrial Average gained 497 points (6.8%) for the week to end at 7776. Tech - heavy Nasdaq gained 88 (6%) to end at 1,545. S&P 500 gained 47 (6.2%) to end at 816. Strength in financial sector followed by industrials and consumer discretionary sectors helped the indices post good gains for the week.

On Monday, 23 March, 2009, The Treasury Department unveiled their plan about buying back most of the bank's toxic assets thereby cleaning up their balance sheet to the extent possible. Treasure Secretary Tim Geithner detailed that the Treasury plans to create a series of public-private investments funds to buy $500 billion to $1000 billion in legacy loans and securities. To encourage participation from the private sector, the government is taking on much of the risk and offering subsidies. This boosted the confidence of the investors and stocks ended substantially higher.

Also, on Monday, the National Association of Realtors reported that sales of U.S. pre-owned homes rose 5.1% to a seasonally adjusted annual rate of 4.72 million in February, boosted by "deep" price discounts. It was the largest percentage gain since July 2003. Sales are down 4.6% in the past year. February's sales increased in all four regions as tracked by the NAR. This gave stocks a huge boost on Monday and Dow ended higher by 98 points.

Again on Wednesday, 25 March, 2009, the Commerce Department reported that demand for machinery and other capital goods rose in February, driving orders for durable goods up 3.4%. The increase came after six consecutive months of drop. Many sectors posted gains in February. The orders for durable goods fell a revised 7.3% in January, much worse than the previous estimate of a 4.5% decline.

In a separate report, the Census Bureau reported that sales of new homes nationwide rebounded by 4.7% in February. Sales of new homes rose to a seasonally adjusted annual rate of 337,000 last month, higher than the 323,000 expected. Meanwhile, the government revised January's sales pace for new homes to 322,000 units, up from the 309,000 reported earlier.

With these reports, Dow ended higher all the first four days of the week.

In the US market on Friday, 27 March, 2009, stocks started and ended the day in the red. After starting the day 117 points down earlier during the day, The Dow Jones Industrial Average ended lower by 148 points at 7,776. The Nasdaq Composite Index, ended lower by 42 points at 1,545. S&P 500 ended lower by 17 points at 815.

Among major economic report for the day, Commerce Department reported today that February personal income in US declined -0.2%, while spending increased 0.2%. Both were in level with estimates. However, real disposable income declined 0.4%.

The technology sector weighed significantly on the Dow on Friday with a number of heavyweights like IBM, Intel coming under pressure today. The tech sector is dragging as fellow component Accenture posted upside results for its latest quarter but the company lowered its outlook for the full year. Also, Intel is trading with weakness after the company announced it will issue a $1 billion common stock offering.

On Friday, crude-oil futures for light sweet crude for May delivery closed at $52.38/barrel (lower by $1.96 or 3.6%) on the New York Mercantile Exchange. For the week, crude ended higher by 0.6%.

In the currency market on Friday, the dollar moved higher against most major rivals as a budget warning from Germany's finance minister pressured the euro.

For the year 2009, Dow, Nasdaq and S&P 500 are down by 11.4%, 2% and 9.7% respectively.