Tuesday Market Recap: Dow Pulled Down By Poor Performance Of The Tech And Energy Sectors

Hurricane Gustav insurance woes could be anywhere from $4-10 billion but the storm was not as damaging as anticipated which is great news for our economy and the oil/energy business of the Gulf Coast.  Hurricane Gustav had been keeping oil prices high for the past few days and after today’s news that Gustav’s destruction was minimal, oil fell $5.75 or 4.98% to close at $109.71 per barrel. Oil prices have declined almost $40 a barrel from the beginning of July and analysts are expected oil prices to fall to $100 in the near future.

The Dow Jones Industrial Average (^DJI) ended today at 11,561.92, down 0.23% or 26.63 points. The Dow initially surged 250 points due to falling oil prices, but poor performances of the Technology and Energy sectors outweighed oil’s price decline and caused the markets to end down for the day. The S&P500 (^GSPC) ended at 1,277.57, down 0.41% or 5.26 points. The NASDAQ (^IXIC) ended down 0.77%, or 18.28 points, to close the day at 2,349.24 due to Technology’s poor performance.

Gold fell $24.30 or 2.93% to $805.00 per ounce. The Dollar gained on the Euro and is currently at 0.6886 vs. the Euro and fell to 108.67 vs. the Yen. The 10 year Treasury note fell to 3.7460%, down 6.7 basis points from Monday.

The Institute for Supply Management announced that its reading for the nation’s manufacturers fell to 49.9 in August from 50.0 in July, matching analysts’ expectations. A reading below 50.0 signals contraction. The index has stayed very close to the 50.0 line since the beginning of the year and analysts expect similar readings below 50.0 for the remainder of the year due to slow consumer spending and high gas prices. The initial inflation reading for August was 77, down from June’s reading of 91.5, even though manufacturers are continuing to try and push the extra cost on to consumers.

The commerce department reported today that construction spending fell by 0.6% in July, doubling the 0.3% decrease economists had expected. Housing activity has fallen 16 months straight, decreasing by 2.3% to a seasonally adjusted annual rate of $357.8 billion, the lowest level since March of 2001. Nonresidential activity also fell in July, dropping 0.7% to an annual rate of $416.8 billion, the first setback in this category since December.

Google (GOOG) aims to decrease the dominance of Microsoft (MSFT) in the web browser market and introduced its own web browser, Chrome, which should help to escalate the Google/Microsoft rivalry to new heights. Chrome is described as a smart and innovative web browser that will make using the internet faster and less frustrating. Currently only a rough edged beta version exists but Google plans to tweak this version and add many new features including: a unique bookmark management tool, a way to email links directly from the browser, and a web page loading progression bar. Chrome has a very unique browser design and will definitely shake up the web browser market and will make the Google/Microsoft feud really interesting over the next few months and both vie for dominance online.

British oil company BP PLC (BP), announced today that its American unit, BP America, will buy a 25% stake, or 135,000 acres, in Chesapeake Energy Corp’s (CHK) Fayetteville Shale assets located in Arkansas. BP will pay Chesapeake $1.9 billion for the 25% stake. BP will pay $1.1 billion in cash at the close of the deal and will pay the remaining $800 million during the remainder of 2008. This announcement comes only a month after BP America bought Chesapeake’s Arkoma Basin Woodford Shale assets, located in Oklahoma, for $1.7 billion.

BP believes that with these two purchases BP establishes itself with two very impressive shale assets and along with its position in the Haynesville Shale assets in Texas, puts itself in three top tier shale plays in the US. These shale assets equate to a net of 1 billion barrels.

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Comment by Fin

2008-09-02 21:00:06

It will be interesting to watch the new browser war, 10 years after the first one.

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