US stocks manage a late turnaround

Wall Street registers its fourth consecutive weekly gains

US market witnessed substantial gains for the week that ended on Friday, 03 April, 2009. Stocks kicked off the week on a slow note and indices suffered losses during the first day of the week on Monday, 30 March, 2009. But thereafter, stocks picked up some momentum. Even on the last day of the week, Friday, 03 April, 2009, stocks managed a late turnaround and finished in the green ultimately after staying the red for the entire day.

Nevertheless, stocks witnessed strong gains for the week. The Dow Jones Industrial Average gained 241 points (3.1%) for the week to end at 8,017.59. Tech - heavy Nasdaq gained 76.67 (5%) to end at 1,621.87. S&P 500 gained 26.56 (3.3%) to end at 842.5.

Earlier during the week, the U.S government's auto task force determined that neither General Motors nor privately held Chrysler had submitted viable restructuring plans and also indicated bankruptcy may be required for the flagging auto companies. This issue kept selling pressure intense in the Wall Street and stocks lingered in the red for the entire day. Gloom also spread over auto sector after GM chairman was asked to quit by President Obama.

But the turnaround began on Tuesday, 31 March, 2009, the last day of the month/quarter, despite weaker-than-expected economic data. Strength in the Financial sector led the broader market to gains, though late-session profit taking cut them in half.

Market managed to rally on that day despite a few disappointing economic reports. Specifically, the S&P/CaseShiller Home Price Index declined 19.0% year/year in January, worse than the -18.6% consensus estimate. Consumer Confidence came in at 26 in March, below the 28 consensus. Finally, Chicago PMI came in at 31.4 in March, below the 34.3 consensus.

Thursday, 02 April, 2009 proved to be the biggest day of the week. All ten major sectors in the S&P closed higher, led by Industrials and Consumer Discretionary sectors.

In the US market on Friday, 03 April, 2009, stocks started the day in the red and ended the day in the green. In fact, the indices climbed up in the green in the final half hour of trading. After being 60 points down earlier during the day, The Dow Jones Industrial Average ended higher by 39 points at 8,017. The Nasdaq Composite Index, ended higher by 19 points at 1,621. S&P 500 ended higher by 8 points at 842.

Among major economic report for the day, the Labor Department reported that the total number of jobs lost since the recession began climbed to 5.1 million. As per the report, U.S. nonfarm payrolls fell by 663,000 in March, while the unemployment rate jumped to a 26-year high 8.5% from 8.1%, as expected.

A separate report showed that U.S. nonmanufacturing sectors contracted at a faster pace in March. The ISM non-manufacturing index fell to 40.8% in March from 41.6% in February. Readings below 50% indicate that more firms are contracting than expanding.

The business activity index rose to 44.1% from 40.2%. New orders fell to 38.8% from 40.7%. The employment index fell to 32.3% from 37.3%. The prices index plunged to 39.1% from 48.1%.

Oil prices fell on Friday, 03 April, 2009. Prices fell as Friday's job loss data once again raised concerns about the overall health of the US economy questioning the demand for energy in the coming months. For the week, oil ended marginally higher. On Friday, crude-oil futures for light sweet crude for May delivery closed at $52.51/barrel (lower by $0.13 or 0.2%) on the New York Mercantile Exchange. For the week, crude ended higher by 0.3%.