US stocks manage a steady turnaround

Energy sector gives a late lift to stocks

US stocks managed to erase all their earlier losses and turn around and end with modest gains on Thursday, 15 October, 2009. Strong earnings from Goldman Sachs and Citigroup failed to give stocks at Wall Street an early boost and stocks lingered in the red for the entire day. But in the final couple of hours, the energy sector helped stocks move up with crude oil ending at year high level. The economic reports also showed that initial jobless claims in US reached at lowest levels since January, 2009.

The Dow Jones Industrial Average ended higher by 47.08 points at 10,062.94. The Nasdaq Composite Index, ended higher by 1.06 points at 2,173.29. S&P 500 ended higher by 4.54 points at 1096.56.

Barring the financial and technology sectors, all the eight economic sectors ended in the green. Energy, utilities and consumer staples were the main winners.

Despite better-than-expected third quarter results from Goldman Sachs and Citigroup, their shares were on the slide and took the broader financial sector lower. But the energy sector tried to pull things through.

In the final hour of trading, the financial sector managed to erase most of its losses. Also, the stocks managed a turnaround due to a late lift managed by the energy sector.

Among economic reports expected for the day, the Labor Department reported on Thursday, 15 October, 2009 that U.S. consumer prices went higher in September, 2009 in US. The consumer price index rose a seasonally adjusted 0.2% in September. The core CPI -- which excludes volatile food and energy prices also increased 0.2% in September on a seasonally adjusted basis. U.S. consumer prices drifted higher in September, led by higher prices for cars, energy and medical care that offset falling rents and home-ownership costs.

In a separate report, The Labor Department reported on Thursday, 15 October, 2009 that the number of people filing for state unemployment benefits fell by 10,000 to a seasonally adjusted 514,000 in the week ending 10 October, 2009. Initial jobless claims have been above 500,000 for 48 straight weeks.

As per the report, it was the fifth decline in the past six weeks and the fewest initial claims since early January. Market was expecting the level of initial claims to fall to about 510,000. The four-week average of new claims dropped by 9,000 to 531,500, also the lowest since January.

Crude prices ended substantially higher at Nymex on Thursday, 15 October, 2009 and ended at the highest level in a year. Prices rose today after the weekly inventory report by energy department showed sudden drop in gasoline inventories for last week. The report came a day late due to the Columbus day holiday on Monday. On Thursday, crude-oil futures for light sweet crude for November delivery closed at $77.58/barrel (higher by $2.40 or 3.2%). Last week, crude ended higher by 2.8%.

In the latest weekly inventory report, EIA reported a build-up of 400,000 barrels in crude inventories against an increase of 2 million barrels. Also, as per the report, gasoline inventories fell by 5.2 million barrels in the week ended 9 October, 2009 against an expectation of build up. Distillate inventories, which include diesel and heating oil, fell 1.1 million barrels.

In the currency market on Thursday, the dollar rose against most of its rivals as US stocks pared some of their yesterday's gains. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.4%.

Barring HDFC Bank, Sify, WNS and Wipro Technologies, all Indian ADRs ended with losses. HDFC Bank climbed up by 2.9%.

For tomorrow, there is no economic report scheduled. IBM, Google and AMD are expected to report earnings after today's close which will have impact on tomorrow's trading.