US stocks end week with substantial losses

Energy sector remains the only sector to end higher for the week

US stocks ended with substantial losses for the week that ended on Friday, 12 November 2010. Lowering of guidance from Cisco Systems coupled with economic reports from China rattled stocks during the week. Economic reports for the week checked in mixed in nature. Increase in European sovereign debt concerns was another reason for stocks to get shaky during the week.



For the week, that ended on Friday, 12 November 2010, Dow ended lower by 251.5 points (2.2%) at 11,192.58. Nasdaq ended lower by 60.77 points (2.4%) at 2,518.21. S&P 500 ended lower by 26.64 (2.2%) at 1,199.21. Nine out of ten economic sectors ended lower led by financial and technology sectors. It was only the energy sector that ended higher during the week.

Among the major Dow components that reported earnings, Cisco said late Wednesday that its quarterly growth would miss Wall Street's expectations. It lowered its forecast battering the tech sector. The stock slumped 16% on Thursday, the worst one day performance for the stock in a decade. The disappointing forecast was blamed on softer spending in the public sector. Other than Cisco, Walt Disney also missed earning estimates.

General Motors reportedly earned $2 billion in the third quarter, with the earnings report coming ahead of the auto maker's initial public stock offering next week. Also, retailer Macy's reported turning a profit in the third quarter, with the department store operator also hiking its outlook for second-half revenue at stores open at least a year.

Among major corporate news during the week, Chevron offered to acquire Atlas Energy for $4.3 bln, a hefty 37% premium. In Addition, shares of Boeing fell on news that its Dreamliner 787 delivery date will be delayed once again.

In terms of economic reports during the week, The Labor Department in US reported on Wednesday, 10 November 2010 that the number of workers who filed new claims for unemployment benefits fell 24,000 last week to 435,000 for the week that ended on 6 November. Market had expected initial claims to fall to a seasonally adjusted 450,000. The four-week average of initial claims, however, sank to its lowest level in two years, down 10,000 to 446,500.

The Commerce Department in US reported on Wednesday, 10 November 2010 that the U.S. trade deficit narrowed in September as exports rose to their highest level in more than two years. As per the report, the nation's trade deficit contracted 5.3% in September to $44.0 billion from $46.5 billion in August. The government initially pegged August's deficit at $46.3 billion.

Additionally, the Labor Department in US reported on Wednesday, 10 November 2010 that due to rise in fuel costs, prices of goods imported into the United States rose 0.9% in October 2010. Prices for imports excluding fuels increased a smaller 0.3%.

Friday, 12 November 2010, brought stocks their worst loss in three weeks. That locked in place the stock market's worst weekly performance since August. Stocks started the session in the red in response to speculation that China might raise interest rates in an effort to fend off inflation.

On that day, the Dow ended lower by 90.52 points at 11,192.58. Nasdaq ended lower by 37.31 points at 2,518.21. S&P 500 ended lower by 14.33 points at 1191.21. All ten economic sectors ended lower led by materials, technology, financial and energy sectors.

Five out of ten economic sectors ended higher led by materials, consumer, and utilities sectors. Healthcare, financial, technology and energy sectors featured among the laggards.

Among the economic report expected for the day, the preliminary Consumer Sentiment Survey for November from the University of Michigan came in at 69.3, which is slightly above the 69.0 that had been expected. The November reading also marked an improvement from the 67.7 that was recorded in October.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended lower by 0.3%. China reported last Thursday that its inflation rose 4.4%, its highest in two years.

Crude prices ended substantially lower on Friday, 12 November 2010 at Nymex. Prices fell despite the dollar index slipping. Prices fell on reports that China is preparing for an interest-rate increase to counter rising inflation. On Friday, crude oil futures for light sweet crude for December delivery closed lower by $2.93 (3.3%) at $84.88/barrel. For the week, crude lost 2.3%.

On Friday, the International Energy Agency revised higher its global demand forecast for oil products this year, by 200,000 barrels a day to 2.3 million barrels a day, or 2.8% growth on-year. As per the report, global oil demand is now expected to average 87.3 million barrels a day in 2010. For 2011, the IEA kept its growth forecast broadly unchanged at 1.2 million barrels a day, or 1.4% growth year on year, with demand seen averaging 88.5 million barrels a day.

Precious metal prices turned lower on Friday, 12 November 2010 at Comex. On Friday, gold for December delivery ended at $1,365.5 an ounce, lower by $37.8 (2.8%) on the New York Mercantile Exchange. During intra day trading, prices fell to a low of $1,359.3. For the week, the yellow metal lost 2.3%. It was first weekly loss for gold in three weeks. December Comex silver futures ended lower by $1.46 (5.3%) at $25.94.

All Indian ADRs ended strictly lower on Friday. Tata motors shed the most losing 5%. ICICI Bank and HDFC Bank followed them losing 2.9% and 2% respectively.

For the year, Dow, Nasdaq and S&P 500 are higher by 7.3%, 11% and 7.5% respectively.