US stocks linger in the red

Stocks manage to pare losses party after Fed's comments

US stocks lingered in the red for the entire day at Wall Street on Tuesday, 10 August 2010. Stocks started the day in the red following weak economic data from China. But some positive comments from the Federal Reserve helped stocks pare their intra day losses partly. The dollar strengthened today leading to lower commodity prices.



For the day, that ended on Tuesday, 10 August 2010, Dow ended lower by 54.5 points at 10,644.25. Nasdaq ended lower by 28.52 points at 2,277.17. S&P 500 ended lower by 6.73 points at 1,121.06. Dow was trading lower by 140 points earlier during the day.

Six out of ten economic sectors ended lower today led by technology, materials, and financial sectors. Telecom and utilities sectors featured among laggards. Majority of Dow components ended lower led by Intel.

Ahead of the Fed statement, U.S. stocks spent the bulk of the session waiting to hear whether the central bank believed the economy needed further help after economic reports illustrated slowing growth at home and in China. Trade data from China showed a sharp slowdown in the growth rate of its imports. Weakness among overseas markets and a disappointing second quarter productivity reading drove stocks markedly lower at the start of session.

Among economic reports expected for the day, the Labor Department reported that productivity fell 0.9% in the second quarter, and the Commerce Department reported that wholesale inventories climbed only 0.4% in June.

In the latest FOMC statement issued today, according to the Fed, the economic recovery is likely to be more modest in the near term than had been anticipated. The latest statement also indicated that the target range for the federal funds rate will remain at 0.00% to 0.25% and that low resource utilization and subdued inflation are likely to warrant exceptionally low levels of the fed funds rate for an extended period.

A positive response to the latest FOMC policy statement brought a bid to the broader market, but stocks still finished with varied losses.

Among the major Dow components, Intel skidded 4% as analysts questioned demand for computers and their computers in a shaky economy.

Crude oil prices ended lower but managed to pare their losses partly on Tuesday, 10 August 2010. Prices fell as the dollar strengthened. On Tuesday, crude oil futures for light sweet crude for September delivery closed at $80.25/barrel (lower by $1.23 or 1.5%).

In the latest monthly report today, the Energy Information Administration predicted a slight increase in global oil demand in the next couple of years and raised its forecast for average oil prices for the rest of the year and 2011. As per the agency, it sees oil at an average of $81 a barrel in the fourth quarter of 2010 and $84 a barrel in 2011, slightly above last month's forecast. The agency also predicted that the U.S. is likely alone among developed nations in showing "significant increases in oil consumption" of about 150,000 barrels a day in 2010 and 2011.

The EIA also slightly increased its projected world oil consumption to 1.6 million barrels a day, compared to 1.5 million the month before. OPEC and non-OPEC supply expectations were also raised, however.

Bullion metal prices ended lower for second straight day on Tuesday, 10 August 2010 at Comex. Prices managed to pare steeper losses though. Gold for December delivery ended at $1,198 an ounce, lower by $4.6 (0.4%) on the New York Mercantile Exchange. During intra day trading, prices touched a low of $1,192. Prices dropped for second straight day after rising for nine sessions. September Comex silver futures ended lower by 8 cents (0.6%) at $18.16 an ounce.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.3%.

Trading volume remained unimpressive in that fewer than 1 billion shares were exchanged on the NYSE this session. That makes for a lackluster follow up to the prior session's paltry count, which came in at its lowest level of the year.

Indian ADRs ended mixed on Tuesday. Tata Motors was one of the main gainers soaring 3%. Infosys and Wipro Technologies lost 0.5% and 0.9% respectively.

For tomorrow, the trade balance data is the main economic data expected. Other than that, earning reports will continue to trickle in.