Service sector report fails to fully offset the pressure on stocks led by comments from Morgan Stanley
US market closed lower today, Wednesday, 3 October, 2007 as investors received mixed news on the service sector of the economy. Seven out of ten economic sectors posted losses today. But the stock market managed to cut half of its losses following the report from Institute for Supply Management on service sector. Comments from Morgan Stanley weighed heavily on technology sector today.
The Dow Jones industrial Average closed lower by 79.3 points at 13,968. The Nasdaq Composite Index, finished lower by 17.68 points at 2,729.43. S&P 500 finished lower by 7.41 points at 1,539.4.
Nineteen of thirty Dow stocks ended in red. Alcoa and Intel led the group of Dow decliners with crude prices slipping even today. General Motors and Home-Depot were a couple of the few Dow advancers.
Technology, specially Semiconductor, sector came under heavy selling pressure today after Morgan Stanley said it expects the companies to under perform due to inventory corrections and an increasingly aggressive pricing environment. Intel, AMD and NVIDA were the main socks that were affected. Intel closed lower by 2.3%.
Crude oil futures dropped marginally today after an Energy Department report showed that U.S. inventories unexpectedly increased last week. Crude-oil futures for light sweet crude for November delivery closed at $79.94/barrel (lower by $0.11/barrel or 0.14%) on the New York Mercantile Exchange.
Market sheds half of its loss after service sector reports hits wires
When market opened in the morning, indices lingered in the red. All ten economic sectors were in red figures with energy and materials pacing the retreat.
ADP, a payroll services company, estimated private employment for September of 58K, which was in-line with the consensus estimate. But market awaited the report from Institute for Supply Management. Dow was trading lower by 72 points.
At the top of the hour, the Institute for Supply Management's services report came in at 54.8. That was down slightly from 55.8 in August, but still above the 50 level that is indicative of growth. The consensus estimate was for a reading of 55.0. Market took the report in a positive way and indices started shedding off their losses.
A weak showing from Micron, which reported its third straight quarterly loss, was an added factor behind the semiconductor group's and therefore technology’s weakness today.
All Indian ADRs ended in red today. MTNL and HDFC Bank were the top two losers dropping 5.9% and 3.2% respectively.
On the New York Stock Exchange, volume topped 1.2 billion shares with decliners topping advancing stocks nearly 5 to 3. On the Nasdaq, nearly 1.9 billion shares exchanged hands, and declining issues outpaced those advancing 9 to 5.
For tomorrow, investors will have the weekly Initial Claims and the August Factory Orders report to set their eyes upon to get further clues about the economy.