Weak consumer confidence data hammers US stocks

Stocks drop for the second straight day

US stocks extended losses for second straight day on Tuesday, 23 February 2010. A stronger dollar and the worst consumer confidence index reading in 10 months triggered stiff, broad-based selling pressure soon after market opened. Though stocks had opened higher during the day, indices soon slipped and remained in the red for the rest of the day.

At the end of the day on Tuesday, 23 February 2010, the Dow Jones Industrial Average ended lower by 100.97 points at 10282.41. Nasdaq ended lower by 28.59 points at 2213.44. S&P 500 ended lower by 13.41 points at 1094.6. Dow opened 6 points higher earlier during the day.

All ten sectors ended in the red led by the energy, financial, technology and materials sectors.

Boeing, Alcoa, Caterpillar, and JP Morgan were Dow's worst performers while Home Depot was among a handful of gainers.

The healthcare sector was a laggard today after the release of the president's health-care proposal, which suggests a tax on high-end health plans be delayed for all workers, not just those in unions, until 2018 and suggested new taxes to help make up for the lost revenue. The plan would cost $950 billion over 10 years. Market reacted negatively to the news but healthcare sector ultimately ended little lower.

The financial sector dropped the most today though it was trading relatively strong in the early going. Energy sector was a major laggard today as crude prices dropped. Tech, was not far behind, though. The sector was down considerably as semiconductor stocks fell sharply out of favor.

In the technology sector, Intel fell today after announcing plans to work with venture-capital firms to steer billions of dollars into new technology investments. Microsoft slipped after reaching a patent licensing agreement with Amazon.com that gives the online retailer rights to use open-source software in its Kindle electronic book reader for an undisclosed sum.

Retailers managed to resist most of the pressure. Group's resistance to sellers was helped by home improvement retailer Home Depot. Home Depot was the Dow's strongest performer, with the home-improvement retailer climbing 1.4% after announcing its first dividend hike since 2006 as earnings topped estimates.

Among economic data expected for the day, the latest consumer confidence reading played a strong hand in this session's selling, Consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy. Just a month after touching a 16-month high, the research group's Consumer Confidence index sank 11 points to 46.0 from an upwardly revised 56.5 in January. It's the lowest reading since April 2009.

Another economic data showed that home prices in 20 major U.S. cities fell a not-seasonally adjusted 0.2% in December compared with November. Prices rose in four of 20 cities in December - Los Angeles, Phoenix, San Diego and Las Vegas.

Crude prices dropped after a long time on Tuesday, 23 February 2010. Prices slipped as the dollar strengthened due to weak economic data that hit the wires today. Weaker than expected consumer confidence data also raised demand concerns for crude in coming months.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $78.86/barrel (lower by $1.45 or 1.8%). Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 0.7%.

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by more than 3%.

Losses in the commodity space outpaced the weakness in the broader markets this session. Precious metal prices ended lower for second straight day on Tuesday, 23 February 2010. Prices slipped as the dollar strengthened due to weak economic data that hit the wires today. On Tuesday, gold for April delivery ended at $1,103.2 an ounce, lower by $9.9 (0.9%) an ounce on the New York Mercantile Exchange. March Comex silver futures ended lower by 33 cents (2%) at $15.89 an ounce.

Baring Dr Reddys and Punjab Tractors, all Indian ADRs ended in the red on Tuesday. Rediff.com and VSNL were the main losers shedding 4.4% and 3.7% respectively.

Tomorrow, there no economic reports scheduled for the day. Earning reports will continue to pour in.