Weekly losses at Wall Street after quite some time

US stocks in search of direction

After quite a few weeks of rally, stocks at Wall Street registered losses for the week that ended on Friday, 19 June, 2009. Stocks had kicked of the week on a weak note with indices plunging in the first two days of the weeks and witnessing a mixed end during the rest of the week. Volume remained relatively light during most part of the week. Traders turned a bit cautious but everyone has started believing that the worst is perhaps over and things in US economy will get better from here. But all are still waiting for some better economic reports confirming their sentiments.

The Dow Jones Industrial Average lost 259.53 points (2.9%) for the week to end at 8,539.73. Tech - heavy Nasdaq lost 31.33 (1.7%) to end at 1,827.47. S&P 500 lost 24.98 (2.6%) to end at 921.33. Nine of the ten sectors ended in the red led by energy, materials and industrials sectors. Healthcare was the only sector to end in the green for the week.

After weeks of fierce wrangling, the Obama Administration came out with the eighty five page proposal to redraw financial regulations. The main elements of the proposal included new consumer-protection agency to monitor credit cards and mortgages, tougher capital standards and a merger of two regulators for banks.

Materials stocks grappled with selling pressure during the early part of the week as basic commodities got knocked around by a resurgent U.S. dollar. The weakness among commodities was also easily visible among oil prices.

Stocks attempted to rebound the next day but failed. Industrial Production came in at -1.1% for May (consensus -1.0%), while the prior month was revised lower to -0.7% from -0.5%. That more than offset better-then-expected housing data, as Housing Starts came in at 532,000 in May (consensus 485,000) and Building Permits came in at 518,000 for the month (consensus 508,000).

Among the other major economic reports expected for the week, the Labor Department reported on Thursday, 18 June, 2009 that continuing U.S. jobless claims took a big drop in the latest week that ended on 6 June, 2009, in a sign that fewer people are having trouble finding employment. Continuing claims fell by 148,000 to 6.68 million during the week ended 6 June, the lowest level in about a month. The four-week average of continuing claims rose, however, by 2,250 to 6.75 million. It was the first time continuing claims fell since early January.

In a separate report, the Conference Board said on Thursday that the recession is "losing steam" and a slow U.S. recovery should begin by the end of the year. The Board announced that the index of leading economic indicators rose 1.2% in May, the second straight increase. The leading index is up 1.2% in the past six months, the first increase since April 2007.

Among the earning reports for the week, Research In Motion reported earnings for its first fiscal quarter that jumped 33% on strong sales of the company's line of BlackBerry smart phones, beating Wall Street's estimates. But FedEx issued disappointing fiscal Q1 guidance.

Standard & Poor's lowered its ratings and revised its outlooks on 22 banks. This hammered US stocks further during the week.

In the US market on Friday, 19 June, 2009, the stock market surrendered an early gain but managed to reclaim a portion of its gains in mixed fashion late in the day. The Dow Jones Industrial Average ended lower by 15.87 points at 8,539.73. The Nasdaq Composite Index, ended higher by 19.75 at 1,827.47. S&P 500 ended higher 2.86 points at 921.23.

Though news flow remained relatively low, volume was unexceptionally high due to quadruple witching option. Late strength in the financial and technology sectors helped market combat with its weakness. But Dow ended in the red. The other two major indices managed to end in the green.

The technology sector acted as the pillar of support for most part on Friday. Microsoft acted as the leader but RIMM acted as the laggard. Microsoft acted as the leader after the company was upgraded to conviction buy list at Goldman Sachs.

In the financial sector, Blackstone Group was a standout after The Wall Street Journal reported that China Investment Corp. is poised to invest $500 million in a hedge fund unit of the investment services company.

After a full day of volatile trading, crude oil prices ended substantially lower on Friday, 19 June, 2009 at Nymex. The drop marked crude's fall for the first time in three sessions. Geo political tensions were offset by demand concerns and the same eventually ended lower. On Friday, crude-oil futures for light sweet crude for July delivery closed at $69.55/barrel (lower by $1.82 or 2.6%). During intra day trading, crude rose to a high of $72.3. For the week, crude ended lower by 3.3%.

In the currency market on Friday, the dollar lost ground as gaining global equity markets pointed to a rise in investors' risk appetite. The greenback has tended to lose ground as investors shift away from perceived safe-haven assets. The dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by more than 0.4%.

For the year 2009, Dow is down by 2.7%. The Nasdaq and S&P 500 are up by 15.9% and 2% respectively.

For the coming week, there are a few notable earnings releases, including Oracle and Monsanto. There will also be some important economic releases, including Existing Home Sales, Durable Goods Orders and the Final reading for Q1 GDP.