US Markets give up gains

Cautionary statements from the Fed Chairman affect stocks

US stocks made a strong start earlier during the day on Wednesday, 09 June 2010 but cautionary statements from the Fed Chairman, Ben Bernanke led stocks run out of gas in the second half of trading. What was earlier viewed as a strong day for Wall Street, turned out to another dull day as stocks. The dollar also remained weak today. Higher crude prices also failed to come to Wall Street's rescue.



On Wednesday, 09 June 2010, Dow ended lower by 40.73 points at 9,899.25. Nasdaq ended lower by 11.72 points at 2158.85. S&P 500 ended lower by 6.31 points at 1055.69. Dow was earlier trading higher by 125 points. All ten economic sectors ended lower led by energy, financials, technology, and utilities sectors.

Twenty-two of thirty Dow components ended lower led by Bank of America.

Economic data was limited to a wholesale inventory report for April that showed a 0.4% increase in inventories. The report did nothing for stocks.

Fed Chairman Bernanke testified before the House Budget Committee this morning, but he offered no new insight on economic conditions. He told a congressional committee the U.S. economy is on track for growth between 3.5% and 4% next year, although he cautioned earlier the pace of growth won't be strong enough for a quick fix for the job market or to tackle bringing down the federal budget deficit.

The Fed's latest Beige Book was also out today. It stated that economic activity continues to improve across all 12 Fed districts, but the pace of recovery remains moderate.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six currencies, fell by 0.7%.

Latest reports indicated that there was a 50% surge in Chinese exports in May, much more than what was expected.

Crude oil prices ended substantially higher on Wednesday, 09 June 2010 at Nymex. Prices rose due to the weak dollar and unexpected drop in crude inventories for last week. On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $74.38/barrel (higher by $2.39 or 3.3%). Prices reached a high of $74.99 during intra day trading.

The EIA reported on Wednesday that the nation's oil stockpiles fell 1.8 million barrels in the week ended 4 June. The figure was much more than expected. Refineries operated at 89.1% of their capacity. Gasoline inventories were unchanged from last week, while distillate stockpiles increased by 1.8 million barrels. Data on gasoline also were relatively bearish as markets were expecting a decline around 500,000 barrels. The distillates increase came in larger than expected and above the five-year average gain for the period.

Also on Wednesday, the Organization of the Petroleum Exporting Countries released its monthly oil-market report that showed the cartel as keeping its estimate for world oil demand. The OPEC expects demand to increase by 950,000 barrels a day this year, but cautioned that an expected moderation in the pace of the economic recovery is likely to impact demand growth forecasts for the second half of 2010.

Bullion metal prices ended lower on Wednesday, 09 June 2010 at Comex. Prices fell following reports that exports from China were much more than expected in May 2010. The stronger euro also took a toll on precious metal's health. On Wednesday, gold for August delivery ended at $1,229.9 an ounce, lower by $15.8 (1.3%) an ounce on the New York Mercantile Exchange. On Wednesday, July Comex silver futures ended higher by 29 cents (1.6%) at $18.18 an ounce.

For every seven stocks on the rise eight were declining on the New York Mercantile Exchange, where 1.7 billion shares traded. Composite volume topped 6.4 billion.

Indian ADRs ended mixed on Wednesday. Dr Reddys was the main gainer soaring 4.9% while Wipro Tech shed 2.3%.

For tomorrow, there are quite a few economic data scheduled. Initial claims, continuing claims and trade balance data are the main ones. Earning reports will continue to trickle in.