Stocks down on more negative earnings surprise.

Stocks opened markedly lower on the day, were mixed during the day and ended it in slightly red, following the release of some economic and corporate nesws.

On the economic front, Commerce Department report showed that personal spending fell by 1.0 percent in December following a revised 0.8 percent decrease in the previous month, marking the sixth consecutive monthly decrease in spending. With most of the job losses coming in the Jan (about 200,000) the consumer spending is going to get even worse from here.

Though personal spending was faling at a faster rate than income (down 0.2%), personal saving as a percentage of disposable personal income was 3.6 percent in December compared with 2.8 percent in November. Though this is off the lows of near 0%, it still is much lower than the historical average of 5.2% in 90,s.

Separately, the Institute for Supply Management said its index of activity in the manufacturing sector unexpectedly rose to 35.6 in January from 32.9 in December, although a reading below 50 still indicates the twelfth consecutive month of contraction in the sector. Hopefully this indicates that the situation does not get any worse.

Much of the hopes are hinged on the stimulus package, but the $819 Bn stimulus package seems to face some resistance from the Republicans as the Senate begins their debate. The main intention of the package should be to atleast stop the job losses, if not job creation, instead of throwing it around like pieces of paper.

I think infrastructure stocks, Healthcare IT stocks, Educational stocks(ceco, coco, esi, dv apol), broad band stocks (esp towers, amt, cci, sbac) would benifit out of the stimuls package. (Should study more about this).

Mood : Sick .. literally, though.
Song: Sweet Pea - Amos Lee (ATT commercial)

Todays share of bad news:

The U.S. Labor Department said that jobless claims were up 3,000 last week to 588,000, more than expected. 

The U.S. Commerce Department said that durable goods orders were down 2.6% in December, weaker than expected. For all of 2008, orders were down 5.7%, the second largest decline on record

The U.S. Census Bureau said that new home sales were at an annual rate of 331,000 units in December, down 14.7% from November's pace and weaker than expected. For all of 2008, there were 482,000 new homes sold, down 38% from 2007. 

The markets showed a notable weakness during the pre market trading as the economic data didnt show any signs of improvement in the economy. After trending higher in the last 4 sessions, stocks moved back to the downside during the day, as traders did some profit taking. 

Housing stocks saw substantial weakness, as traders reacted to the disappointing new home sales data. Financials were hurt by the profit taking  from yesterdays rally. Significant weakness also emerged in the airline sector, as reflected by the 5.2 percent loss posted by the Amex Airline Index. U.S. Airways (LCC) and Continental (CAL) fell sharply after reporting significantly wider fourth quarter losses compared to a year ago.

GOld, as I mentioned in my previous posts has edged above $900 dollars again. 

Another batch of key economic data is due to be released on Friday, including the Commerce Department's advance report on fourth quarter gross domestic product. The report is expected to show that GDP fell by 5.4 percent in the last three months of 2008.