US stocks end with modest gains

Federal Reserve's statement gives financial sector a good push

US stocks stayed in the red for the first half of the day on Wednesday, 27 January 2010. Traders dismissed another batch of better-than-expected earnings as they prepared for the latest Federal Open Market Committee (FOMC) announcement at 2:15 PM ET. Then Fed's comments gave the financial stocks a good push, which thereby led a modest rally in the market helping the indices end in the green.

At the end of the day on Wednesday, 27 January, 2010, the Dow Jones Industrial Average ended higher by 41.87 points at 10,236.16. Nasdaq ended higher by 17.68 points at 2221.41. S&P 500 ended higher by 5.33 points at 1097.5. Earlier in the day, Dow was trading lower by almost 45 points.

Seven of ten economic sectors ended in the green led by financial, technology and healthcare sectors. Materials, energy, and utilities sectors were the main laggards.

While Boeing was a major Dow gainer, Caterpillar stock weighed on the Dow. Apple and RIMM helped Nasdaq outperform its counterparts.

Among earning reports expected for the day, Caterpillar , United Technologies, Boeing and ConocoPhillips released upside earnings surprises for the latest quarter. However, themes like low quality earnings and mixed guidance made for an underwhelming response to the announcements. Boeing reported fourth quarter profit more than expected. Caterpillar's fourth quarter profit was below expectation and the company lowered its FY 2010 earning outlook.

Financials made up the only major sector to sport a gain and materials stocks were the worst off this session during the first half of the day. Steel stocks were been a primary source of weakness in the sector. Financial sector was up as regional bank stocks and diversified banks gained ground.

Among economic data expected for the day, new home sales data for December didn't do anything to improve the mood of participants with its midmorning release. According to the report, annualized new home sales made a 7.6% monthly decline, which contrasted negatively with the consensus call for a 3% month-over-month increase.

The Federal Reserve's statement on U.S. monetary policy came out in the noon hours today. The central bank, as expected, kept its federal-funds rate unchanged on Wednesday and said it would keep them exceptionally low for an extended period.

Crude oil prices dropped on Wednesday, 27 January 2010. Prices dropped due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand for crude in coming months. Buildup in gasoline inventories for last week also aided in slipping crude oil prices.

On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $73.67/barrel (lower by $1.04 or 1.4%). During intra day trading, prices rose to a high of $75.14. Last week, crude ended lower by 4.7%. On a year to date basis till date, crude is lower by 8.4%.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose marginally. The dollar gained almost 0.4% against the euro.

Indian ADRs ended in a mixed mode today. HDFC Bank, Punjab Tractors, and Tata Motors ended in the red today losing 4%, 4.6% and 5.4% respectively. Rediff.com was one of the few winners gaining 3.6%.

Tomorrow, there are quite a few economic reports scheduled for the day. The important ones are initial claims, continuing claims and durable goods orders. Other than that, earning reports will continue to dominate.