US Market remains confused

No chance of immediate rate cut though Federal Reserve shows worries confuse investors

It was a confused market today with the US Market getting mixed messages and behaving in a mixed way. Basically, market went nowhere today, Tuesday, 21 August, 2007. U.S. Federal Reserve saying it added $3.5 bln in reserves via overnight repurchase agreements to reserves via one-day repos left the market again questioning whether Fed actions will be enough.

Market once again finally closed mixed with Dow losing for the day. The Dow Jones Industrial Average closed lower by 30.5 points at 13,090.86. Tech-heavy Nasdaq gained 12.71 points to close at 2,521.3. S&P 500 gained 1.57 points to close at 1,447.12.

Richmond Fed President, Jeffery Lacker, saying that Fed’s decision last week was consistent with his view that market volatility does not require a change in the funds policy rate was the main catalyst for sending Dow to negative territory. The Dow turned negative soon thereafter and remained there for the rest of the day. Crude prices slipping below $70/barrel was welcome news for investors.

American Express, H-P, Alcoa and Verizon were the main Dow winners today. Exxon Mobil, United Technologies and Honeywell were the main Dow laggards.

Nasdaq got an extra support today from Apple shares which rose more than 4%. Analysts saying that Apple might sell more than 800,000 iPhones this quarter, beating the company’s goal of 730,000, as consumer demand for the device stays strong, were the main reason for this surge.

Bernanke is "absolutely" prepared to use "all the tools at his disposal"

When market opened in the morning, all the three indices opened in red but it reversed soon after. The Materials sector paced the way, but upside leadership from the much more heavily weighted Financial sector provided early support.

Split sector leadership continued to dictate morning's volatile action; Indices slipped in the red within an hour of trading again.

On the top of the hour, Senator Christopher Dodd's commentary regarding credit turmoil and market volatility offered little relief. Dodd, said that Fed Chairman Bernanke is "absolutely" prepared to use "all the tools at his disposal" to address the credit crisis. Dodd also said he approves the Fed's decision to cut the discount rate and doesn't want to put political pressure on the Fed.

Indices slipped immediately after the comments hit the market. But recovered after some time.

Patni Computers gains almost another 10%

The Treasury market stabilized today, with the yield on the 13-week Treasury bill rising to 3.4% from 2.95% on Monday.

Among the Indian ADRs, all Indian ADRs once again ended in the red today barring Patni Computers. Patni ended up being up by 9.5% at $21.12. Wipro and Infy closed down by 3.2% and 4.5% respectively.

Discount retailer Target registered 13% increase in second-quarter earnings. Revenue rose nearly 10% to $14.6 billion. Earnings were in line with analysts' expectations. Target shares rose 1.7%

Crude slips below $70 as Dean re-graded to Category 2

Crude oil futures once again slipped today as hurricane Dean was reduced to Category 2 storm by the U.S. National Hurricane Center. Prices have dipped almost 12% since early August on concerns that losses on subprime mortgages may slow the world's biggest economy.

Crude-oil futures for light sweet crude for September delivery closed at $69.57/barrel (lower by $1.39/barrel or 1.96%) on the New York Mercantile Exchange. On a yearly basis, prices are 4.1% lower. October crude, which became the lead-month contract at the session's end, closed $1.39 lower at $69.57 a barrel.

Volume at the New York Stock Exchange came to 1.3 billion shares, with advancing stocks outpacing decliners by around 5 to 3. At the Nasdaq, nearly 1.7 billion shares were exchanged, and advancers ran slightly ahead of decliners.

For tomorrow, in addition to earnings reports, the Energy Department's weekly inventory report at 10:30 ET will garner some attention. A number of notable companies are expected to report their results and luxury homebuilder Toll Brothers is one of them.