US stocks end flat at Wall Street

Federal Reserve revises down US GDP growth for 2010 and 2011



US stocks oscillated between red and green territory for almost the entire day on Wednesday, 14 July 2010. Ultimately, stocks ended almost flat despite a positive earning report from a tech bellwether. Weak retail sales data coupled with Federal Reserve's pessimistic take on the current US economy made stocks trade around the unchanged mark in the final hour of trading.

For the day, that ended on Wednesday, 14 July 2010, Dow ended higher by 3.7 points at 10,366.762. Nasdaq ended higher by 7.71 points at 2,249.84. S&P 500 ended lower by 0.17 points at 1,095.17. Dow was trading lower by 50 points at one point of time.

Seven of ten economic sectors ended higher led by technology, industrial, and consumer staple sectors. Financial, energy, and consumer discretionary sectors featured among laggards.

Fourteen out of thirty Dow components ended higher at Wall Street today led by technology components – Intel, Microsoft, H-P and Cisco Systems.

After Tuesday's close, there came a better than expected earning report and upward guidance from Intel. But the effect of the same was offset by drop in retail sales in June. The Commerce Department in US reported today that sales at US retailers dropped 0.5% in June.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.3%.

In the latest FOMC meeting, Fed indicated that real US GDP for 2010 is now expected to range from 3.0% to 3.5%, which is down from the previous range of 3.2% to 3.7%, while the projection for 2011 GDP ranges from 3.5% to 4.2% after it had previously ranged from 3.4% to 4.5%. As for unemployment, the 2010 projection rate ranges from 9.2% to 9.5% after it had ranged from 9.1% to 9.5%. The expected unemployment rate for 2011 ranges from 8.3% to 8.7% after it had ranged from 8.0% to 8.5% before. FOMC members agreed that it would be appropriate to keep the target federal funds rate at a range of 0.00% to 0.25%. Crude pared its earlier gains following these comments.

Among other economic data expected for the day, import price data was given little attention. Prices for June reportedly fell 1.3% month-over-month after a 0.5% monthly decline in May. A separate report showed that inventories for May in US increased by 0.1%, which is slightly softer than the 0.2% increase that had been widely expected.

Crude oil prices pared earlier gains and ended lower on Wednesday, 14 July 2010 at Nymex. Prices dropped due to Federal Open Market Committee's latest take on the US economy. Earlier in the day, prices rose as energy department reported more than expected drop in crude inventories for last week. On Wednesday, crude oil futures for light sweet crude for August delivery closed at $77.04/barrel (lower by $0.14 or 0.1%).

In the latest weekly inventory report, the EIA reported on Wednesday a decline of 5.1 million barrels in crude inventories in the week ended 9 July against an expected drop of 2.6 million barrels. The EIA also reported an increase of 1.6 million barrels for gasoline supplies and a rise of 2.9 million barrels for inventories of distillates, which include heating oil and diesel. Market had projected increases of 950,000 barrels in gasoline supplies and 800,000 barrels in distillate supplies.

Bullion metal prices ended mixed on Wednesday, 14 July 2010 at Comex. Gold prices ended marginally lower while silver prices gained following a weak dollar. Bullion metal prices remained volatile and fluctuated throughout the day. On Wednesday, gold for August delivery ended at $1,207 an ounce, lower by $6.5 (0.5%) an ounce on the New York Mercantile Exchange. Earlier in the day, prices made quite a few attempts to register gains. September Comex silver futures ended higher by 18 cents (0.7%) at $18.29 an ounce.

Barring a couple of components, Indian ADRs ended mostly lower on Wednesday. Tata Motors and ICICI Bank were the main losers shedding 2.8% and 1.4% respectively.

A number of earning and economic reports are expected tomorrow. Initial claims, continuing claims, producer price index and core PPI data are the major economic data expected. JP Morgan chase and Google are scheduled to report earnings.