Wall Street joins world in reacting to Dubai crisis

Early gains in the week help indices register little weekly losses

It was a holiday shortened week at Wall Street that ended on Friday, 27 November, 2009 with US market being closed on Thursday, 26 November, 2009 on account of Thanksgiving Holiday and half day closed the following the day. But due to weakness in the later part of the week, indices suffered little losses for the week, though market had managed a strong start on Monday, 23 November, 2009. But news of Dubai's debt crisis rattled Wall Street once again.

For the week, Dow ended lower by 8.24 points (0.1%) at 10,309.92. Nasdaq ended lower by 7.6 points (0.4%) at 2138.44. S&P 500 ended almost unchanged at 1091.49. Sector wise, financial led the pack of losers while healthcare and telecom led the pack of gainers.

Market made off to a good start on Monday, 23 November, 2009, following a weak dollar and better thane expected housing report. Market managed to cling to its gains for the following two days – Tuesday and Wednesday. Among economic reports expected for the week, the housing data showed that home sales in October rose 10.1% to 6.1 million homes, greatly outpacing expectations of 5.7 million as the first-time home buyers tax credit provided much of the incentive for the increase.

The world stock markets revisited last year's stock market crisis partly on Wednesday, 25 November, 2009 after news hit the wires that the Dubai government asked creditors, which reportedly include many European banks, particularly in the United Kingdom, to defer payments on some $20 billion in debt coming due over the next 18 months. Reportedly, Dubai World, the largest corporate entity in the Persian Gulf emirate, asked creditors last Wednesday for a six-month stay on repayment of $60 billion in debts. Indices across the world just plunged soon after the news.

Wall Street reacted a little late to the news with market being closed on Thursday, 26 November, 2009. In the US market on Friday, 27 November, sellers moved concertedly to pressure stocks amid news of credit troubles in Dubai. Their actions gave the stock market its worst single-session percentage drop of the month and caused volatility to spike.

On that day, The Dow Jones Industrial Average ended lower by 154.48 points at 10309.92. Nasdaq ended lower by 37.61 points at 2138.44. S&P 500 ended lower by 19.13 points at 1091.51. Losses were broad based, too. In fact, all 30 Dow components logged a loss. Broader market pressure and weakness among commodities took their toll on the materials sector and the energy sector. The two led declines for most of the session.

Crude prices fell at Nymex on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the crude oil prices.

On Friday, crude-oil futures for light sweet crude for January delivery closed at $76.05/barrel (lower by $1.91 or 2.4%). Earlier during the day, the contract dropped to a low of $72.39. For the week, crude ended lower by 1.8%.

Yellow metal prices ended their nine day consecutive winning streak and ended lower on Friday, 27 November, 2009. Prices fell as the debt concerns in Dubai further troubled investors. The rising dollar also pressured the precious metal prices. Silver prices also ended substantially lower.

On Friday, gold for December delivery ended at $1,174.2, lower by $12.8 (1.1%) an ounce on the New York Mercantile Exchange. Earlier during the day, it rose to a high of $1,195 and also fell to a low of $1,130. In the previous nine sessions, gold gained more than 7%. For the week, gold gained 2.6%. On a year to date basis, gold price is higher by 33%.

In the currency market on Friday, the dollar headed up against most of the major currencies. The dollar index, which measures the strength of dollar against basket of six other currencies, rose by almost 0.2%.

For the year, Dow, Nasdaq and S&P 500 are higher by 17.5%, 35.6% and 20.8% respectively.

Earnings season has ended for this season at Wall Street and there are no notably Treasury auctions for the coming week. But the economic calendar is full, with the ADP Employment change on Wednesday, 2 December, 2009 preceding the key Nonfarm Payrolls figure and Unemployment Rate on Friday, 4 December, 2009.