Friday, January 23, 2009

Technology Shares Remained In Pressure - Jan 23, 2009

Thursday, the US stock market closed sharply lower with technology shares remained in pressure after the technology giant Microsoft reported earnings that missed target and said it would cut up to 5000 jobs. However the grim data on initial jobless claims and housing starts did little to revive optimism in the broader market.

On the earnings front, Apple reported better-than-expected top and bottom line results for the latest quarter, but issued downside guidance.
Nokia posted a bigger-than-expected drop in fourth-quarter sales and earnings, and also gave a pessimistic outlook for industry volume. The company warned that 2009 is looking tougher than previously thought.

Among the corporate news front, Bank of America fell around 15% after the bank said former Merrill Lynch boss John Thain will be leaving Bank of America.

On the economic front, the initial claims for the week ending Jan. 17 jumped 62,000 to 589,000. The consensus estimate called for 543,000 claims. Further the continuing claims gained 97,000 to nearly 4.61 million.
Moreover, the housing starts for the month of December totaled 550,000 as against the expectation of 605,000. Housing starts for December were at their worst level in decades. Meanwhile, December building permits came in at 549,000 as against the consensus estimate for 600,000 building permits.

The Dow Jones Industrial Average (DJIA) dropped by 105.30 points to close at 8,122.80. The NASDAQ Composite (RIXF) index decreased by 41.58 points to close at 1,465.49 and the S&P 500 (SPX) fell 12.74 points to close at 827.50.

Among the Dow’s 30 components, 24 of its components ended in red mainly led by the financial stocks like Citigroup, Bank of America, Microsoft and General Motors down by 15.26%, 14.52%, 11.71% and 5.95% respectively. Microsoft shares came into pressure after after the software giant said it was laying off 5,000 workers in the next 18 months, the first major round of layoffs in its more than 30-year history.

Crude oil futures for the month of February delivery grew by $0.12 to $43.67 per barrel on New York Mercantile Exchange.

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