US stocks end modestly higher

Earnings and economic reports indicate that worst might be over

Swine flu news dominated the US market for the week that ended on Friday, 01 May, 2009 with modest gains. Economic and earning reports continued to check in during the course of the week one after another. The reports, in most cases, pointed out that the worst might be over for the overall US economy in terms of the ongoing recession and things might have bottomed out and will only start to improve from now on.

The Dow Jones Industrial Average gained 136.12 points (1.7%) for the week to end at 8,212.41. Tech - heavy Nasdaq gained 24.91 (1.5%) to end at 1,719.20. S&P 500 gained 11.29 (1.3%) to end at 877.52.

During the middle of the week, advanced reading for first quarter GDP came in at a much weaker-than-expected -6.1% (consensus -4.7%). But stocks shrugged off the GDP figure and rallied ahead of the FOMC's rate decision and policy statement that afternoon. The FOMC kept its key interest rate in a range of 0.00%-0.25%, as expected.

Economic reports dominated the entire week. Consumer confidence came in at a better-than-expected 39.2 for April, well above the 29.7 consensus estimate. Chicago PMI's turn, as it came in at a better-than-expected 40.1 for April vs. the 35.0 consensus.

Finally, on Friday, the ISM Manufacturing Index for April came in at 40.1. That was much better than the 38.4 that was expected, and was also up from 36.3 in March. But economic conditions remained dour as factory orders for March declined 0.9%, which was worse than the 0.6% decline that was widely expected, and February orders were revised lower to reflect an increase of 0.7%. Also, U.S. consumer sentiment rose in April, but remained at relatively low levels, according to a survey released by the University of Michigan.

In the US market on Friday, 01 May, 2009, stocks started the day in a choppy mode. Volumes remained extensively low. But the indices managed to end the day with modest gains. Economic reports dominated the day. The Dow Jones Industrial Average ended higher by 44 points at 8,212. The Nasdaq Composite Index, ended higher by 1.9 points at 1,719.2. S&P 500 ended higher by 4.7 points at 877.5.

In the financial sector, the big headline of the day came late morning when a government source said it would announce information on the bank stress tests late afternoon on Thursday, 7 May, later than the original date of 4 May. This followed a slew of headlines on the tests throughout the week, mainly the one which stated that Bank of America and Citigroup might need to raise additional capital based on early results of the tests.

Among major earning reports of the week, Exxon Mobil's earnings results missed analysts' expectations. Chevron too reported that its first quarter profits have almost halved compared to last year.

Crude oil ended higher for the third straight day on Friday, 01 May, 2009 helping crude register its second consecutive weekly gain. Better than expected earning and economic reports gave some hopes that the worst might be over for the overall economy in terms of recession and things might just get better from here thereby increasing the demand for energy in the coming months. On Friday, crude-oil futures for light sweet crude for June delivery closed at $53.2/barrel (higher by $2.08 or 4.1%) on the New York Mercantile Exchange. For the week, crude ended higher by 3.2%.

For the year 2009, Dow and S&P 500 are down by 6.4nd 2.8% respectively. Nasdaq is up by 9%.