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Worries About Slower Global Economic Growth Weighed On The US market
US indices started the Wednesday session in negative territory as global economy worries worsened investors’ moods. The slower growth in Europe, Japan and even the emerging markets threaten the results of the American companies, which are strongly dependent on the demand of their products from abroad. The drop of the crude oil price for a fourth straight day is no longer considered as favorable for the equity market, after speculations that its decline is also based on the weaker global demand. The good US fundamental news didn’t manage to restore the positive sentiment. July Fabric orders rose by 1.3%, while expectations called just 1.0%, and excluding transportation, orders rose 1.0%. Adding to the unease, the Federal Reserve said in its Beige Book report that economic activity has been slow across most of the United States in recent weeks.
The best performing blue-chip was General Motors Corp with its shares rising by 5.8% to $11.27, while the decliners were led by Intel Corp falling by 4.6% to $21.54.
Lehman Brothers was once again in focus. The commodity hedge fund Ospraie management LP that the bank has a 20% stake in will close down after losing 40% for the year so far. Despite that Lehman’s stocks rose by 5.0% to $16.94.
Shares of Corning Inc fell sharply by 8.0% to $17.95 after the world’s largest maker of glass used in LCD displays cut its third-quarter sales and profit forecast.
In an average trading volume session only Dow managed to close in green.
Dow Jones Industrial Average rose by 0.1% to 11532.88, S&P500 declined by 0.2% to 1274.98 and Nasdaq Composite was down by 0.7% to 2333.73.
Trading volume on NYSE was 1.2 billion shares, with a ratio advancers/decliners 8 to 7, and volume on Nasdaq was 2.1 billion shares, with a ratio advancers/decliners 14 to 13.
TECHNICAL OVERVIEW
S&P 500 – USA
The short term picture remains unchanged as S&P 500 continues to consolidate in a narrow range near the key resistance level at 1290, which is 38.2% retracement of the 1439-1199 drop. Although the neutral trading is likely to maintain in the following days the mid-term sentiment is still positive as a signal for this is given by the cross from the bottom of the 50- days SMA by the 26-days SMA. The main target of the index is the resistance at 1315, followed by 1370. On the downside a strong support is seen at 1270, which coincides with the 50-days SMA, followed by 1250, which is 23.6% retracement of the mentioned drop and 1230.
S&P 500 – USA (chart, table)
DAX 30 – Germany
The short-term picture remains unchanged as DAX was traded in a narrow range near the level at 6520, which still shows resistance to the upward movement. During the next days the consolidation is likely to continue as there is not enough momentum for a successful test of that level. Otherwise, if broken, next main target would be the key resistance at 6620, which is 50% retracement of the 7229-5997 drop. The positive sentiment remains for the mid-term while the index still holds above the 26-days and the 50-days SMA, and the key level at 6470, which is 38.2% retracement of the mentioned drop, shows a strong support. On the downside, below that level support is seen at 6320, followed by 6210.
DAX 30 – Germany (chart, table)
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04.09.2008 Dow daily report.pdf, 493 Kb
