US stocks submerged in red

Weak economic data rattle stocks for entire day

Weak set of economic data rattled US stocks for the entire day on Thursday, 19 August 2010. Stocks started and ended the day in the red. The day was heavy with economic reports and all checked in worse than expected thereby questioning the pace of global recovery for last year's recession.



For the day, that ended on Thursday, 19 August 2010, Dow ended lower by 144.33 points at 10,271.21. Nasdaq ended lower by 36.75 points at 2,178.95. S&P 500 ended lower by 18.53 points at 1,075.63. Dow was trading lower by 186 points at one point.

All ten economic sectors ended lower led by financial, materials and industrial sectors. All thirty Dow components ended lower led by Intel.

Among earning data expected for the day, The Labor Department in US reported on Thursday, 19 August 2010 that first-time filings for state unemployment benefits rose unexpectedly last week to reclaim the highest level since the middle of last November. As per the report, initial claims rose 12,000 to 500,000 for the week ended 14 August 2010.

Claims had fallen as low as the 427,000 level in mid-July but have worsened steadily since and now have increased for three straight weeks. Meanwhile, the latest four-week moving average for initial claims rose 8,000 to stand at 482,500. This is the highest level since December 2009.

In addition to this, the surprisingly weak Philly Fed report, as well as a simultaneously released leading economic indicators report combined to rattle U.S. stocks on Thursday.

The Federal Reserve Bank of Philadelphia in US reported on Thursday, 19 August 2010 that the factory sector in the Philadelphia region showed unexpected weakness in August falling into negative territory for the first time in a year. As per the report, the Philly Fed's business activity index fell to negative 7.7 in August from positive 5.1 in July, well below the positive 7 expected.

The surprisingly weak Philly Fed report, as well as a simultaneously released initial claims report combined to rattle U.S. stocks. At the same time as the Philly Fed report, the Conference Board reported its leading economic index rose 0.1% in July against an expected forecast of a 0.2% advance.

Intel led declines in the Dow industrials, with shares falling 3.5% after the company announced plans to acquire security software maker McAfee for cash in the chipmaker's largest-ever deal. Intel is paying a roughly 60% premium over McAfee's closing price on Wednesday.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies erased earlier gains and climbed up.

Crude prices dropped again on Thursday, 19 August 2010. Prices fell due to a spate of weak economic data that hit Wall Street on Thursday. On Thursday, crude oil futures for light sweet crude for September delivery closed at $74.43/barrel (lower by $0.99 or 1.3%). Last week, crude ended lower by 6.7%.

Bullion metal prices ended mixed once again on Thursday, 19 August 2010 at Comex. Gold prices ended marginally higher while silver prices slipped. Gold prices rose as weak economic data increased the appeal of commodities as a hedge against inflation. On the other hand, silver dropped as dollar strengthened.

On Thursday, gold for December delivery ended at $1,235.4 an ounce, higher by $4 (0.3%) on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,239.5. September Comex silver futures ended lower by 7 cents (0.4%) at $18.33 an ounce.

Losers outpaced advancers by a roughly 5-to-1 ratio on the New York Stock Exchange, where 1.07 billion shares traded. Composite volume hit 4.44 billion.

Baring ICICI Bank and HDFC Bank, all Indian ADRs ended lower on Thursday. Tata Motors and Wipro Tech lost 2.2% and 2% respectively. ICICI Bank and HDFC Bank gained 1.7% and 1.1% respectively.

For tomorrow, no economic data are expected. But earning reports will continue to trickle in.