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Dow Jones Industrial Average

 2nd Oct 09

Key Statistics

Open: 9507.62

High: 9711.67

Low: 9430.08

Close: 9524.78

Change: -21.61 (0.23%)

Prev Close: 9508.23

RSI: 41.55

MACD: 58.96

Snapshot

• Dow ended marginally down by another 21.61 points lower, and S&P 500 down by around 0.45% each.
• Record Jobless claims since 1983 raise doubts of an early recovery in US economy.

Current Market view – Cautious

Market Strategy

Traders/Investors are advised to advised not to rush for building fresh long positions at these levels. The markets appear to be consolidating at these levels, before deciding to take fresh direction.

Market Commentary

U.S. stock markets continued a poor start to the month of October as all the major indices plunged 2-3% following weak economic reports. Negative news flow on jobless claims worried the investors further and the markets took a slip for the second successive day toward the end of the week. Even the acquisitions in recent times like those made by DELL and CISCO Systems Inc. have failed to cheer the market and these stocks have plunged from earlier levels on fears of huge cash outflows, and the time it may take for them to take their acquisitions EPS accretive.

Employers cut263,000 jobs from their payrolls in September after cutting a revised 201,000 in August, according to the Labor Department report released on Friday morning. Economists were expecting 175,000 jobs cuts, on average. The unemployment rate, generated by a separate survey, rose to 9.8%, a 26-year high. That was in line with economists' forecasts and up from the 9.7% rate in August. Most economists expect the national unemployment rate to hit 10% by year end, although in a number of states it is much higher.

Another separate government report showed that factory orders plunged in August versus forecasts for a rise. The Commerce Department said factory orders fell 0.8% versus forecasts for a flat reading. Factory orders rose 1.4% in the previous month.

On Friday, CIT was one of the stocks from financials which was in focus. The troubled lender CIT launched a debt-exchange plan as part of its efforts to restructure and avoid bankruptcy. But the company may still file for Chapter 11 protection if the plan is not successful.

Apart from same, Apple shares gained on Friday after both two brokerage houses- Morgan Stanley and UBS issued positive upgrades on the company's forecast.

On Friday, Precious metals like gold saw substantial gains off session lows as the dollar fell. This allowed December gold futures to break through the $1000 per ounce level. Gold traded in positive territory for the rest of the session and closed at $1004.30 per ounce, up 0.4%.

In all, Friday was all but a listless session for stocks in light of cautious approach shown by majority of traders, who were skeptical of taking fresh long positions even on declines. Chartists suggest that S&P 500 make some time to make it back to 1060 levels, following which the bullish signs would get confirmed.

The Day Ahead

·        On Monday, no major economic data, barring that on treasury bills, is due for release.