Saturday, January 26, 2008

Stimulus package pleases US Market

US Market managed to end higher for the second consecutive day today, Thursday, 24 January, 2008. Reports that a bond insurer bailout is not imminent weighed on the stock market shortly in the morning hours. But a stimulus package from the Bush administration to ward off recession in US cheered investors and stocks rallied in the post lunch hours.

The Dow Jones industrial Average ended the day with a gain of 108 points at 12,378. The Nasdaq Composite Index, finished higher by 45 points at 2,360. S&P 500 finished higher by 13 points at 1,352. Twenty-one out of thirty Dow stocks ended in the green today.

As per the stimulus package from the current administration, House leaders Nancy Pelosi and Treasury Secretary Paulson announced their bipartisan $150 billion fiscal stimulus plan. As per the plan, individuals who earn up to $75,000 will be eligible for a $600 check and couples who earn up to $150,000 will be eligible for $1,200. Individuals who do not pay income tax, but have earned more than $3,000 will be eligible for a $300 check. Parents will get $300 per child. Businesses will get $50 billion in incentives.

Though, the stimulus plan still has to pass the House and Senate, investor sentiments got a good boost as the morning economic reports did not have much of a good news to deliver.

December existing home sales lower than expected

On the economic front, December existing home sales came in at a worse than expected. December existing home sales was reported at 4.89 million. This was short of the consensus estimate of 4.95 million. Existing sales are down 2.2% compared to last month's reading of 5 million. The median sale price of an existing home is down 6% against last year.

Also, weekly jobless claims came in at 301,000, lower than the expected reading of 320,000. The good part was that the figure is less than the typical recessionary levels of over 450,000

Earlier this week, it was announced that the Federal Open Market Committee (FOMC) approved a 75 basis point intermeeting cut in the fed funds rate to 3.50%. The Board of Governors also approved a 75 basis point cut in the discount rate to 4%. This was Feds first move this year to keep recession at a bay.

Crude prices erased all of yesterdays gains and prices rallied today. Prices rose today after the Bush Administration announced a stimulus package to ward off recession. Prices rose despite Energy Department announcing a rise in crude inventories for week ended 18 January, 2008. Crude-oil futures for light sweet crude for February delivery today closed at $89.41/barrel (higher by $2.42/barrel or 2.8%) on the New York Mercantile Exchange. Prices are 61% higher than a year ago.

As per the weekly inventory report by the Energy Department, U.S. crude inventories, rose for a second week, increased to 289.4 million barrels in the week ended 18 January. Crude inventories at Cushing, Oklahoma, the delivery point for Nymex-traded crude, fell by 800,000 barrels to stand at 15.7 million barrels. Total commercial petroleum inventories, including crude, motor gasoline, heating oil, increased by 2.2 million to 972.3 million barrels last week, and were in the middle of the average range for this time of year.

Volume on the New York Stock Exchange neared 2.2 billion, and advancing stocks topped those declining almost 2 to 1. On the Nasdaq, more than 2.5 billion shares traded, and advancing issues outran decliners 4 to 3.

Indian ADRs mostly ended in the red today. ICIC Bank was one of the main losers today shedding 3.8%. Dr Reddys remained one of the winners gaining 3%.

Investors will again be focused on earnings reports tomorrow. Caterpillar and Honeywell are the main Dow names to report their earnings tomorrow.

Powered byCapital Market - Live News

No comments:

Post a Comment