US stocks in search of direction ahead of crucial EU meet

For the day, that ended on Wednesday, 07 December 2011, Dow ended higher by 46.24 points (0.4%) at 12,196.4. The Nasdaq ended marginally lower by 0.35 points (0.21%) at 2649.21. The S&P 500 ended higher by 2.54 points (0.2%) at 1,261.01.

Seven out of ten economic sectors ended higher by financial, healthcare and consumer discretionary sectors. Industrials, utilities and energy sectors ended lower. Dow components had a mixed finish with more gainers than losers. JP Morgan Chase and Pfizer led the Dow winners.

Though stocks made a steady start, traders failed to find encouragement from news that the European Central Bank (ECB) will relax criteria for loan collateral, choosing instead to remain focused on tomorrow's monetary policy decision from the ECB and the outcome of a summit of eurozone officials later this week.

Investors largely held out hope this week that European Union leaders would reach agreement on Friday, 09 December 2011 on a plan that would help the 17 nations that use the euro to further connect their economies. Those expectations were bolstered by comments from German Chancellor Angela Merkel supporting a stronger fiscal union among euro-zone members.

Participants applied pressure once the session opened, sending all 10 major sectors into the red. Financials were among those that were hit the hardest. However, financials rallied back later in the day. The sector's bounce to a gain came in the wake of news that results from recent EBA stress tests will be released tomorrow.

Crude prices ended little lower on Wednesday, 07 December 2011 at Nymex. Latest weekly inventory report showing surprise increase in crude stockpiles for last week pressured prices. Prices also slipped as traders remained tensed about latest developments in the euro zone as troubles there show no signs of abating. Light and sweet crude for January delivery fell $0.79 (0.8%) to $100.48 a barrel on the New York Mercantile Exchange on Wednesday.

The Energy Information Administration reported a rise in inventories of 1.3 million barrels for the week ended 2 December 2011. Market had expected a decline around 1.3 million. The inventories report was also bearish for products. The EIA said gasoline inventories rose by 5.1 million barrels, and supplies of distillates increased by 2.5 million barrels. Market had expected gasoline inventories up 1 million barrels, and distillates up 1.5 million barrels.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies stayed steady. The dollar gave back its morning gain and was trading lower against collection of competing currencies by about 0.2% earlier during the day.

It was another day of mixed finish for precious metals on Wednesday, 07 December 2011 at Comex. Gold prices ended the U.S. day session modestly higher but silver prices dropped. Gold prices ended near the daily high on Wednesday. Bargain hunters stepped in to buy the recent dip in prices. Gold for February delivery ended higher by $13 or 0.8%, to end at $1,744.8 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. It rose to a high of $1,747 and fell to a low of $1,723.6 during intra day trading. On Wednesday, silver prices for March delivery fell $0.12 or 0.4% to end at $32.63.

Red metal prices ended lower for second consecutive day on Wednesday, 07 December 2011 at Comex. Prices were hit as traders remained tensed about latest developments in the euro zone as troubles there show no signs of abating. Traders also worried about impending demand from China, the largest user of the red metal, in the coming months. Copper for March delivery ended lower by 2 cents (0.55%) at $3.56 a pound at Comex on Wednesday. Copper was up about 1% earlier in the session as investors hoped that EU leaders, who will meet on 9 December 2011 will take tougher measures to resolve the debt crisis.

Advancers edged ahead of decliners on the New York Stock Exchange, where 968 million shares traded. Composite volume topped 4.1 billion.

Indian ADRs closed mostly lower on Wednesday. In the banking space, HDFC Bank was down 0.9% at $28.51 and ICICI Bank ended down 0.8% at $30. In the IT space, Patni ended down 1.8% at $17.15. In the Telecom space, MTNL ended down 2.7% at $1.07 and Tata Communication ended down 0.9% at $7.64. Tata Motors ended up 0.2% at $18.3.

For tomorrow, initial and continuing claims are the major economic data are expected. Couple of earning reports will trickle in.

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