US stocks drown further in losses

Financial sector acts as the main culprit

US stocks continued to stay deep in the red on Tuesday, 11 August, 2009. It was mainly the financial sector followed by the energy sector that led the pack of laggards today. Market did not show any excitement a day ahead of Federal Reserve's important decision on interest rates in its tomorrow's Federal Open Market Committee meeting. All ten sectors ended in the red today.

The Dow Jones Industrial Average ended lower by 96.5 points at 9,241.45. The Nasdaq Composite Index, ended lower by 22.51 points at 1,969.73. S&P 500 ended lower by 12.75 points at 994.35.

Weakness was broad-based for the entire session as participants moved to take profits, but defensive-oriented consumer staples stocks managed to limit losses.

In the financial sector, MBIA was a primary laggard after being hit with a downgrade at JPMorgan.

The Labor Department reported on Tuesday, 11 July, 2009 that U.S. companies slashed their workers' hours in the second quarter, boosting the productivity of the workplace to an annualized rate of 6.4%. It was the fastest increase in productivity in the nonfarm business sector in nearly six years. Unit labor costs, a key indicator of inflationary pressures, plunged at a 5.8% rate, the largest decline in nine years.

The report detailed that hourly compensation rose just 0.2% in the second quarter. After inflation, real hourly compensation sank 1.1%. Productivity in the first quarter was revised much lower, reflecting the revision to growth released in late July. As revised, productivity increased 0.3% in the first quarter, compared with the earlier estimate of 1.6%. Unit labor costs fell 2.7%.

A separate report showed that wholesale inventories for June decreased 1.7%, which is a sharper decrease than the 0.9% decrease that had been widely expected. The previous figure was revised downward to reflect a 1.2% decrease. Inventories have fallen in each of the past 10 months.

Crude prices ended lower on Tuesday, 11 August, 2009. Prices fell in synchronization with falling US stocks and also as traders mulled that last week crude supplies registered an increase. On Tuesday, crude-oil futures for light sweet crude for September delivery closed at $69.45/barrel (lower by $1.15 or 1.6%). During intra day trading, it hit a low of $68.71. Last week, crude ended higher by 2.1%.

In the currency market on Tuesday, the dollar index, a six-currency gauge of the greenback's value, fell by almost 0.2%.

All the Indian ADRs ended in the red today. Rediff and Sify were the major losers shedding 7.3% and 8.4% respectively.