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Friday, March 6, 2009

Dow Jones Below 6600 - Stock Markets in 2009 - Where Are They Heading?

US markets tumble as investors were rattled by doubts about the survival of General Motors, energy weakness, and JPMorgan Chase’s credit rating cut.

Beleaguered auto giant General Motors, which has already received USD 13.4 billion in Federal loans, has hinted at possible bankruptcy if its restructuring plans do not succeed in the long-term. Also, auditors raised substantial doubts about the company's ability to survive outside bankruptcy if it fails to stem its losses or stop burning cash.

General Motors dropped 16 percent, ending below 2 dollars after auditors raise concerns on sustainability of company. Read - How ADRs performed

Meanwhile, Citigroup dipped below 1 dollar mark as investors worry about the viability of the bank and the potential for nationalisation.

The Dow Jones ended below 6,600 for the first time since April 1997, it fell 281.40 points, or 4.1%, to 6,594.44. The S&P 500 index too slipped 30.32 points, or 4.3%, to 682.55. The Nasdaq composite index fell 54.15 points, or 4%, to 1,299.59.

CHECKOUT: Stock Market 2009 Predictions - Where would it be in Feb-March 2009?

DOW JONES 10 YEAR CHART (Click To Enlarge)

After breaking 7500 levels, DOW finds its support at 6000 - 6500 levels in near future. For Dow this fall comes to 20 % and so world markets could follow the same fall in terms of percentage.

SENSEX 10 YEAR CHART (click to enlarge)

SENSEX has closed today at 8843 points. If you consider 20 % fall, it comes around 7000. October 2008 lows are also in the same range. i.e. around 7200. SENSEX has long term support between 7000 and 7300.

CHECKOUT: Interesting Analysis On BSE SENSEX

Special Feature: Stock Market in 2009 - Stocks to Buy

One bright spot on the economic front: jobless claims dropped by 31,000 last week to 639,000. Meanwhile, productivity showed a worse-than-expected decline for the fourth quarter, while factory orders fell for a sixth straight month in January.

In commodities, oil fell more than a dollar as the deteriorating economic outlook heightened expectations that fuel consumption would shrink further.
Gold rose, snapping an eight- session slump, as some investors purchased the precious metal as an alternative to stocks. Silver climbed.

Copper fell for the first time in three days after Chinese premier Wen Jiabao indicated the government doesn't need to increase stimulus spending to achieve its target for economic growth.

Meanwhile in Europe, ECB and Bank Of England cut rates to revive liquidity in the economy. But the offers no respite to the selloff in markets, FTSE, DAX and CAC witness deep cuts. Read - How Asian markets are doing
Reference: Moneycontrol.com

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