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The Dow Futures Report

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US Equities fall in volatile session as banking concerns

Wed, Apr 29 2009, 05:38 GMT
by Paul Brittain

Alaron

US EQUITIES FALL IN VOLATILE SESSION AS BANKING CONCERNS, SWINE FLU EVOLUTION OVERCOMES GROWING CONSUMER OPTIMISM, IBM DIVIDEND INCREASE.

US Equities slipped on Tuesday in a tug of war session that saw the indices swing between gains and losses. Negative sentiment won out on the session as fresh worries regarding Bank of America and Citigroup’s capital positions and swine flu developments offset a surprisingly positive read on consumer confidence and IBM’s boosting of its dividend.

Citigroup and Bank of America, two of the main poster children for the current banking crisis, came under pressure today after US regulators told the banks that they would likely not pass criteria set by US government “stress tests” and would need to raise additional capital. Citigroup and Bank of America responded by announcing proposals to increase conversion of preferred stock and sell off businesses such as Nikko Securities.

The banking woes set the tone for the early part of the session. Turnaround to positive territory for equities was fueled by reports showing U.S. house prices slowed in February while consumer confidence in April had its biggest jump in more than three years.

IBM gave the Dow its biggest boost, after its board approved a 10 percent increase in its dividend and authorized a stock buyback. Once again, the tech sector offered the most opportunity today due to its stronger cash position. By the end of the session though, the inability to break through any new resistance levels and lingering concerns regarding the evolution of the swine flu breakout eroded gains for the major indices, though they did close significantly off of their lowest levels of the day.

Technically, June Dow futures remain above support at 7870. Upward target for the market remains at 8169. However continued range trading is likely to increased downward momentum that should likely test 7640. Look for a key downward target to be 7270.

Published on  Wed, Apr 29 2009, 05:43 GMT