US Market reels in credit woes and higher crude

Solid earnings reports and upbeat analyst commentaries get totally eclipsed

Fresh credit woes hit US Market today, Tuesday, 31 July, 2007 and stocks were once again pushed back to the wall. Higher oil prices with crude crossing $78/bbl for the first time ever this year added further negative sentiment among investors. Higher crude prices though helped the Energy sector initially, the stocks too slipped in red while going into close. Apple mainly pushed the technology stocks lower today.

Market was fairly up in the morning hours after General Motors posted much better than expected results. Dow was up by more than 105 points at one time. But some solid earnings reports and upbeat analyst commentary were overshadowed in the final hour of trading. Credit markets concerns and bad-home loans once again resurfaced today after news that American Home Mortgage Investment might liquidate its assets after failing to meet margin calls.

The Dow Jones Industrials Average today fell by a huge 146.3 points at the end to close at 13212. Tech heavy Nasdaq shed 37 points to close at 2546. S&P 500 dropped 18.66 points to close at 1455. Twenty-six out of the thirty Dow stocks closed in red today.

All 10 economic sectors lost ground paced by sell-off in Financials that saw a more than 3% swing from its morning highs. Technology was a close second while Industrials and Discretionary also fell substantially.

American Home Mortgage Investment said today that it is unable to borrow on its credit facilities and is struggling to raise money, including "the orderly liquidation of its assets." Yesterday, AHM was unable to fund lending obligations of approximately $300 mln. The stock lost 90% of its value.

Apple weighs heavy on Tech stocks on speculation of iPhone production cut

When market opened in the morning today, core PCE rising just 0.1% for the fourth straight month helped pave the way for another day of broad-based buying. Dow component, General Motors swinging to a much larger than expected Q2 profit just made the situation all the more encouraging.

Also, Chicago PMI checked in with its lowest reading of 58.5 since April. However, since any number over 50 still reflects growth, market reacted positively to the figure. Of the 10 economic sectors trading higher, Utilities paced the way.

But soon a 1% rise in oil prices to their highest level in a year and a reversal in Health Care took some steam out of early buying efforts. The absence of upside leadership from both Tech and Financials started acting as the main trouble for the bulls.

Technology was heavily hit today after a major sell-off in Apple on heavy volume crippled the sector. Speculation that Apple might cut iPhone production provided shareholders good enough reason to take some money off the table.

Host of economic data will set the tone of trading for tomorrow

Crude oil futures rose to a record close of $78.21 a barrel in New York on speculation demand will outpace supply as refiners increase fuel production. Futures touched $78.28 during intra day trading.

Volume hit 1.8 billion shares at the New York Stock Exchange, while 2.4 billion shares were traded at the Nasdaq. Declining stocks beat advancers 9-7 at the NYSE, and by 18-11 on the Nasdaq.

A host of economic data will set the tone of trading for tomorrow. ISM Index will provide investors with an update on US manufacturing activity. Also garnering attention at 10:00 ET will be Pending Home Sales data, the Energy Dept.'s weekly inventory report at 10:30 ET followed by Auto/Truck Sales at 17:00 ET.

Among earnings reports expected tomorrow, Dow component Walt Disney heads the list of earners after the close.