Indices register largest percentage wise gain in FY 2007
US Market closed sharply higher on Wednesday, 28 November, 2007 after Federal Reserve Vice Chairman Donald Kohn reportedly hinted at a possible rate cut, amid ongoing problems in the housing and credit markets. The indices soared today and it was Dow’s greatest percentage wise gain in FY 2007 till date. The two day rally (including yesterday’s gains) was the biggest gain for indices since November 2002. All ten economic sectors posted gains today, led by a financial shares.
The Dow Jones industrial Average ended the day with a gain of 331 points at 13,289. The Nasdaq Composite Index, finished higher by 82 points at 2,662. S&P 500 finished higher by 41 points at 1,469.
All thirty Dow stocks ended in green. Citigroup and AIG were the main Dow winners today. The two stocks soared by 6.5% and 5.9% respectively.
Fed Vice Chairman Kohn gave futures a nice boost today after he said the Fed must be "flexible and pragmatic" in policy. Market took his comments as if he was hinting at another quarter to half a percentage point interest rate cut at the 11 December policy meeting.
Finance sector, especially Citigroup was once again centre of everyone’s attention today. This was mainly because on reports at rumors in the Wall Street Journal that Citigroup and Bank of America were contemplating a merger. But the report was denied by both companies. Yesterday Citibank was also in focus after an Abu Dhabi investment company made a $7.5 billion investment in the company thereby becoming the largest shareholder of Citigroup.
Wipro Technology leads among the Indian ADRs
On the economic front, October durable goods orders were sluggish. Also, October existing home sales came in at a 4.97 million annual rate. That is close to the expected 5.0 million rate, and down 1.2% from September's 5.03 million rate.
On the negative side of things, it was Wells Fargo’s turn this time. Wells Fargo announced that it will take a $1.4 billion charge in the fourth quarter to increase loan loss provisions related primarily to home equity loans.
In the technology sector – Apple, Qualcomm and Research In Motion provided required leadership.
All Indian ADRs ended in green today registereing good gains. Wipro Technologies was the main winner gaining 6.3%. It was followed by HDFC Bank and Tata Motors, each gaining 5.4%.
Crude oil drops to lowest level in a month
Crude oil price dropped to its lowest level in almost a month after Energy Departments reported in the weekly inventory report that crude supplies fell less than expected for the week ended 23 November. Comments from Organization of Petroleum Exporting Countries (OPEC) that the cartel is ready to increase production any time also led prices erode further.
Crude-oil futures for light sweet crude for January delivery closed at $90.6/barrel (lower by $3.8/barrel or 4%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 49% from a year ago.
Volume on the New York Stock Exchange topped 1.3 billion, and advancing stocks topped declining issues 7 to 1. On the Nasdaq, 2.1 billion shares were exchanged, and advancers outran decliners 3 to 2.
Tomorrow, investors will look for new economic data, along with a host of earnings reports, to help set the tone of trading.