US stocks rattled by World Bank report

Maximum losses for US stocks in almost two months

US stocks ended substantially lower on Monday, 22 June, 2009. With lack of news and support from any specific sector, US stocks lingered in the red since morning till the end today. The selling effort was in the wake of the World Bank's downwardly revised forecast for the major economies. The financial, energy and material sectors were the main laggards. There was no economic report scheduled today.

The Dow Jones Industrial Average ended lower by 200 points at 8,339.73. The Nasdaq Composite Index, ended lower by 61 at 1,766. S&P 500 ended lower 28 points at 893.

Today's loss marked the worst percentage loss for US indices in two months time.

Eight of the ten sectors ended in the red today. The financial sector ended the day with the maximum loss. The materials and energy sector also bore the maximum burnt of today's weakness due to the rebounding dollar. Healthcare sector too failed to stick to its recent gains. Only the telecom and utility sectors managed to trade with partial gains.

Among earning reports for the day, drug retailer Walgreen weighed on the group after posting quarterly earnings results that missed the consensus estimate.

Yesterday, the World Bank revised down global growth forecast in 2009 from - 1.7% to - 2.9%. US economy is expected to contract deeper by - 3.0%, down from - 2.4%. Euro zone is expected to contract by - 4.5%, down from - 2.7% while Japan is expected to contract by - 6.8%, down from - 5.3%. Outlook for emerging markets are mixed with Russia expected to drop - 7.5%, down from - 4.5% and Brazil to contract - 1.1%, down from 0.5%. However, China's economy is expected to expand 7.2%, up from 6.5% while India's economy is expected to expand 5.1%, up from 4.0%.

Crude prices at Nymex ended substantially lower on Monday, 22 June, 2009. The strong dollar and forecast from World Bank that the global economy will contract more than expected this year, hammered oil prices today. On Monday, crude-oil futures for light sweet crude for July delivery closed at $66.93/barrel (lower by $2.62 or 3.8%). Last week, crude ended lower by 3.3%.

In the currency market on Monday, the U.S. dollar rose against most other major currencies except the Japanese yen after the World Bank warned of a deeper global economic contraction. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by more than 0.5%.

Economic data will be in focus with the Existing Home Sales report at 10:00ET. Among earning reports expected, Oracle is a major name.