US Market at record high

Market takes bad news from finance sector in good spirit and indices rally

It was once again a day for record high at US Market. Traders took bad news in terms of profit earning from two top companies in good spirit and indices rallied today, Monday, 01 October, 2007. The Dow Jones industrial Average crossed the 14,000 mark for the first time since July 2007 and reached a new all-time high. Nine of the ten S&P 500 sectors finished the day in the green.

The Dow Jones industrial Average closed higher by 191 points at 14,087. The Nasdaq Composite Index, finished higher by 39 points at 2,741. S&P 500 finished higher by 20 points at 1,547.

All but two out of thirty Dow stocks ended in green today. Mc Donalds, Citigroup, American Express, Boeing and IBM were the top Dow winners. General Motors remained one of the two Dow laggards and shares slid 1.8%.

Today, Citigroup warned that its third quarter earnings would fall approximately 60% from a year ago due to the credit turmoil. But the company did say it expected fourth quarter earnings to be back to normal.

On the other side, the CEO of UBS, reportedly said in an interview that the company expects to take a $3.4 billion write-down and a third quarter loss due to credit market woes.

ISM Index for September comes below expectations

When market opened in the morning, stocks rallied right out of the gate.

The Institute of Supply Management (ISM) index on national manufacturing conditions was a bit below expectations at for September. The ISM Index, which is a gauge of national manufacturing activity, dipped to 52.0 for September from 52.9 in August. The data were slightly lower than the consensus estimate of 52.5. The reading shows manufacturing are expanding, as a number above 50 reflects growth.

The fact that market reacted positively to news from Citigroup and UBS gives a sense that investors are aware of the fact that the worries regarding the financial mess are already priced in the market.

Among Indian ADRs, all closed in the green except for Rediff.com and Patni whose shares closed slightly lower. VSNL was the top gainer closing up by 11.8%. MTNL and WNS Holding followed with gains for 5.9% and 5.8% respectively. On the finance sector, HDFC Bank and ICICI Bank closed up by 1.7% and 3.5% respectively.

Crude prices back at $80

Crude oil futures, gasoline futures and heating oil – all dropped today. The main reason behind slipping crude prices was profit taking. Prices also slipped on speculation that demand from refineries will decline as they earn less from selling fuels.

Crude-oil futures for light sweet crude for November delivery closed at $80.24/barrel (lower by $1.42/barrel or 1.74%) on the New York Mercantile Exchange. Prices are up 28% from a year earlier.

Volume on the New York Stock Exchange topped 1.4 billion shares, and advancing stocks outran decliners by more than 3 to 1. On the Nasdaq, 1.9 billion shares exchanged hands, with advancers outpacing decliners by more than 2 to 1.

For tomorrow, investors will once again look for economic data to help set the tone of trading. The August Pending Home Sales report is released at 10:00 ET. Also garnering attention will be Auto/Truck Sales for September, which is expected to hit the wires at 17:00 ET.