US Market ends flat paring early gains

Market seems to get back some confidence as global banks continue to inject liquidity

Federal Reserve perhaps today got what it wants – lower volume and a bit lower volatility. US Market seemed to appreciate the global central banks' efforts followed by Federal Reserve’s to ensure a smooth flow of credit and the indices sported modest gains throughout the day. But without much of a reason, indices reversed course in the final few minutes of trading and all the three indices closed in red, though marginally.

The European Central Bank pumped in another $65 bln into money markets today and declared that markets are returning to normal which initially helped renew confidence. Federal Reserve too added a much smaller than expected $2.0 bln to the system and the same also contributed to the improved underlying tone. The Fed Funds rate opened at the Fed's target of 5.25% for the first time in three days.

The Dow Jones Industrial Average, after being up by almost 100 points earlier in the day, dropped by 3 points while going into close at 13236.53. Tech-heavy Nasdaq shed 2.65 points to close at 2542.24. S&P 500 lost 0.72 points to close at 1452.92.

Eighteen out of thirty Dow stocks closed in the green today. Boeing, Alcoa, H-P and United Technologies led the team of Dow winners for the day. American Express, Exxon Mobil, Procter & Gamble and Home-Depot led the team of Dow laggards.

Reports that one of Goldman Sachs' struggling hedge funds has received a $ 3 bln investment and confirmation that Goldman is not unwinding its global Alpha or North America Opportunities Funds also offered some relief among investors today.

The Fed Funds rate open at the Fed's target of 5.25% for the first time in three days

When market opened in the morning, all the three indices opened in green. Dow was trading up by almost eighty-five points. Easing credit concerns gave the economically-sensitive Industrial sector a nice lift.

Consumer Discretionary also turned in a similarly strong performance as a stronger than expected rebound in July retail sales brought back bargain-hunting interest among beaten-down retailers.

Despite a mixed bag of reports from individual retailers last week, the Commerce Department today said retail sales rose 0.3% in July after a 0.7% decline in June. Economists had been expecting a 0.2% rise last month.

But major financial stocks suffered a setback. JP Morgan shares lost 1% even after an upgrade from Deutsche Banc to buy from hold. Citigroup shares also fell 1% after reports that the bank lost more than $700 million in its credit business in recent weeks.

Among the Indian stocks, Tata Motors was a major gainer after the scrip closed 2.5% higher at $17.16. Wipro Technologies was up by almost 3% at $14.11. In the banking sector, while ICICI Bank registered 1.5% increase to close at $43, HDFC Bank eked out a marginal gain of 0.1% to close at $84.72.

All eyes set on Home-Depot and Wal-Mart’s earnings tomorrow

Crude oil futures finished a little higher today after traders were a bit ascertained that US economic slowdown might not take place that soon as central banks across the world are injecting liquidity into the system. Crude pared earlier higher gains as a storm near Gulf of Mexico headed away from sensitive regions.

Crude-oil futures for light sweet crude for September delivery closed at $71.62/barrel (higher by $0.15/barrel or 0.21%) on the New York Mercantile Exchange. It hit an intra day high of $73.19/bbl.

At the New York Stock Exchange, 1.7 billion shares were traded, and advancing and declining stocks ran nearly even. On the Nasdaq, 2.1 billion shares were exchanged, and declining issues outpaced advancing stocks by an 8 to 7 ratio.

Dow components Home Depot and Wal-Mart will be tomorrow morning's headliners as they come out with their earnings reports. Other than this, the market will focus on Producer Price Index data and the International Trade report. PPI gives market watchers the latest measure of inflationary pressure amongst suppliers and manufacturers. The trade report will provide the latest balance between imports and exports, which influence the dollar in currency markets.