A dull day at Wall Street

Indices linger in the red for the entire day despite mixed batch of economic data

US stocks ended in the red on Wednesday, 03 June, 2009. Despite a couple of mixed economic reports, the indices failed to move up into the green even for once. It was mainly the materials and energy sectors that got hammered because of the sudden surge in dollar index today. Fed Chairman Bernanke spoke before the House Budget Committee today morning and stated that inflation is likely to fall over the next year, and overall economic activity is expected to turn up later this year. The expected remarks did not bring any major change in market movements today.

The Dow Jones Industrial Average ended lower by 65.6 points at 8,674. The Nasdaq Composite Index, ended lower by 11 points at 1,825. S&P 500 ended lower by 13 points at 931. But the Dow managed to recover from the session lows. At one point during the day, Dow had dropped by almost 129 points.

All the ten sectors ended in the red today led by the materials and energy sectors.

The ADP employment report stated on Wednesday, 03 June, 2009 that the U.S. private sector eliminated 532,000 net jobs in May, 2009, the fewest jobs lost since November, 2008. Goods producing industries cut 267,000 jobs while services cut 265,000. Manufacturing firms cut 149,000 positions, the 39th consecutive decline. Construction firms shed 108,000 jobs, the 28th straight monthly decline. Financial firms cut 32,000 jobs, the 18th straight decline.

The report also stated that employment in the private sector has fallen by 5.86 million since the recession began in December 2007. The April ADP index was revised to a decline of 545,000 from a decline of 491,000 previously reported. But the pace of job cutting has slowed in recent months, from an average of 691,000 in the first three months of the year to 539,000 over the past two months.

In a separate report, the Commerce Department reported on Wednesday, 03 June, 2009 that orders for U.S.-made factory goods rose by 0.7% in April, 2009, more or less in line with expectations. Excluding transportation, however, orders were up just 0.1% in April. Taking out defense goods, factory orders climbed by 0.3%. New orders for manufactured goods are now up in two of the last three months. They fell by 1.9% in March, 2009 but rose by 0.7% in February, 2009.

Separately, the ISM Services Index for May came in at 44, and was essentially in-line with expectations.

Crude prices dropped substantially on Wednesday, 03 June, 2009 as energy department reported sudden rise in crude inventories for last week. Market was expecting a decline in crude inventories. Prices also fell today due to the firming up of the dollar. On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $65.7/barrel (lower by $2.86 or 4.2%).

EIA reported today that U.S. commercial crude inventories for the week ended 29 May rose to 366 million barrels, up 2.9 million barrels. Market was expecting a decline to the tune of 2 million barrels.

In the currency market on Wednesday, the U.S. dollar index, a gauge of the greenback against six major currencies, rose as much as 1.3%, following a 6.1% drop in May. It was the first increase for the dollar in five sessions. The dollar rose today against the euro after data showed the European economy shrank 2.5% in the first quarter.

Other than a few earning reports, on the economic front, weekly initial jobless claims and the first quarter productivity report are expected at 8.30ET tomorrow. Fed Chairman Bernanke will give opening remarks at a Fed Conference at 8.45ET.