Crude oil inventories gained, gasoline stockpiles fell.
Government data released Wednesday showed that crude oil inventories climbed again in the most recent week, adding to an advance that took place in the previous week. Meanwhile, gasoline and distillate stockpiles continued to slide. The Department of Energy''s Energy Information Administration said that crude oil inventories rose 1.4 million barrels in the week ended February 23. Specifically, the measure climbed to 329 million barrels from the previous week''s level of 327.6 million barrels. This followed an increase of 3.7 million barrels recorded in the previous week. Oil inventories for the week were 2.6% below last year''s level. Meanwhile, gasoline inventories showed a week-over-week decline of 1.9 million barrels. The added to a decline of 3.1 million barrels that took place in the previous week. The level of gasoline inventories was 2.1% below last year. Distillate fuel oil had an inventory decline during the week ended February 23 as well. Stockpiles of these products, which include heating oil, slipped by 3.8 million barrels. This added to recent declines, with a draw down of 5 million barrels taking place in the previous week.

New home sales tumbled 16.6% in January.
The Department of Commerce released its report on new home sales in the month of January on Wednesday, showing that new home sales fell much more than economists had been expecting. The data added to recent concerns about the strength of the housing market. The report showed that new home sales fell 16.6 percent to an annual rate of 937,000 units in January from a revised 1.123 million unit rate in December. Economists had expected sales to edge down to a 1.08 million unit rate from the 1.12 million unit rate originally reported for the previous month. The decline in January marked the steepest drop in new home sales since a 23.8 percent drop in January of 1994 and resulted in the slowest pace of sales growth since February of 2003. A substantial drop in new home sales in the West contributed to the decline, with sales in the region falling 37.4 percent in January. New home sales in the Northeast, Mid-West, and South also showed notable declines. The report also showed that the median sales price of new houses sold in January was $239,800, which is up from $239,400 in December but down 2.1 percent year-over-year. The Commerce Department added that the seasonally adjusted estimate of new houses for sale at the end of January was 536,000, which represents a supply of 6.8 months at the current sales rate.


9:45AM U.S. stocks opened higher. The Dow recovered.
U.S. stocks opened higher, recovering from the steep losses posted yesterday when Dow Jones industrials plunged 416 points. Some of the most notable decliners on Tuesday gained ground, with American Express (AXP: chart), up 0.9%, Procter & Gamble (PG: chart), rising 2.6%. The Dow was also helped by Merck & Co. (MRK: chart), which rose 2.4% after lifting its Q1 earnings forecasts. Further boost to the blue-chip average was provided by Boeing (BA: chart) which gained 0.5% after J.P. Morgan upgraded its stock. However, Home Depot (HD: chart) fell 0.6% after warning it sees earnings will drop this year. Blue-chip stocks with earnings closely tied to the economy declined, with Alcoa Inc. (AA: chart) falling 0.5%, Caterpillar Inc. (CAT: chart), down 1.5%, and Dupont (DD: chart), losing 0.6%. Telecoms advanced in early trading as Sprint Nextel (S: chart) jumped 5% on better-than-expected Q4 earnings and revenue. Biotech stocks posted losses, while pharmaceutical issues moved higher. In early trading, the Dow was down 10.66, or 0.09%, at 12,205.58. The Standard & Poor''s 500 index was down 1.30, or 0.09%, at 1,397.74, and the Nasdaq composite index was off 9.77%, or 0.41%, at 2,398.09.

Fourth-quarter GDP growth revised down 2.2%.
Wednesday morning, the Department of Commerce released its preliminary report on the fourth quarter gross domestic product, showing that the pace of growth was downwardly revised from the advance reading. The report showed that the pace of GDP growth was revised down to 2.2 percent in the fourth quarter compared to the advance reading of 3.5 percent. The downward revision came in roughly in line with economist estimates. Despite the downward revision, the pace of growth in the fourth quarter still represents an acceleration from the 2.0 percent growth that was reported for the third quarter. The acceleration in the pace of growth compared to the third quarter primarily reflected a downturn in imports as well as faster growth in consumer spending, exports, and federal government spending. However, the Commerce Department also said that downward revision to fourth quarter GDP growth was primarily due to downward revisions to private inventory investment and to consumer spending on goods, as well as an upward revision to imports of goods.

The report also said that motor vehicle output subtracted 1.24 percentage points from fourth quarter GDP growth compared to the previously reported subtraction of 1.17 percentage points. Motor vehicle output contributed 0.76 percentage points to the third-quarter growth. With the downward revision to the pace of growth in the fourth quarter, the GDP growth for all of 2006 was revised down to 3.3 percent from 3.4 percent. This compares to the 3.2 percent rate of growth that was seen in 2005. At the same time, the report showed a downward revision to the pace of inflation in the third quarter, as the annual rate of growth by the index of consumer prices, excluding food and energy prices, was revised down to 1.9 percent from the advance reading of 2.1 percent. With the revision, this represents an even more significant slowdown from the 2.2 percent rate of growth that was seen in the third quarter. The downward revisions to the pace of both economic growth and inflation may help to renew optimism that the Federal Reserve could consider lowering interest rates sometime in the near future.


9:30AM London trims losses Wednesday on a strong opening in US.
The UK market was lower on Wednesday. After losing 2.3% in the previous session, the FTSE 100 rallied in mid-session trade, trimming losses to 1%, or 64 points, at 6,222.0.

Advancers

Whitbread, the leisure group, is leading the gainers after a very strong trading statement this morning. It announced sales for the first 50 weeks of the year to February 15 2007 have grown by 10.3% and same-store sales are up by 4.3%, though it played down takeover talk. Whitbread rose 2.2%. Retailer Debenhams also advanced on talk that acquisitive Icelandic firm Baugur is circling. Shares have jumped 6%.

Decliners

The mining sector bore the brunt as Xstrata fell 2.4% and Anglo American dropped 2.5%. Banks were also sharply lower, led by HBOS, after the Scottish bank posted annual profit in line with forecasts but warned of increased margin pressure in the coming months. The owner of Halifax fell 4.3%. In the wider sector, Barclays lost 2.7%, Northern Rock fell 2% and Royal Bank of Scotland was 1.7% lower.

Other stocks which fell included Alexon Group down 4.6% as Merrill Lynch lowered its recommendation on Alexon, the U.K. owner of almost 1,400 clothing stores and department-store concessions, to neutral from buy. Allergy Therapeutics lost 5%, as the U.K. vaccine maker announced its six-month loss widened to 6.76 million pounds from 535,000 pounds a year earlier.


9:00 AM Market futures pointed to moderately higher start. GDP in Q4 rose 2.2%.
U.S. stock futures pointed to a slightly higher opening on Wednesday, following a heavy global sell-off yesterday. The pre-market sentiment was helped by partial recovery in Shanghai, as well as data on Q4 economic growth, which was revised down less than expected. The Commerce Department said that economy grew at a sluggish 2.2% pace in Q4, much slower than the initially reported reading of 3.5%. Economists had been expecting a downward revision of 2%.

In corporate news, the world’s biggest home improvement retailer Home Depot Inc.(HD: chart) said it will invest $2.2 billion into improving its business in 2007, despite expectations of lower earnings and weak sales growth. The comopany said it will open 115 new stores this year. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in same-store sales and earnings per share decline of 4% to 9%. Company''s shares dropped 1% in the pre-open.

Another Dow component, aerospace and defense contractor Boeing (BA: chart) added 0.8% after it was upgraded to neutral from underweight at J.P. Morgan, due to valuation. In the defense sector, the broker cut its rating on Lockheed Martin (LMT: chart) and upgraded L-3 Communications (LLL: chart). In other broker news, investment banks Goldman Sachs (GS: chart), Lehman Bros. (LEH: chart) and Bear Stearns (BSC: chart) were downgraded to neutral from buy at Merrill Lynch. S&P 500 futures on Wednesday rose 10.80 points to 1,406.10 and Nasdaq 100 futures climbed 14.25 points to 1,764.75. Dow industrial futures rose 75 points to 12,255.


8:00AM NY-7:00PM Mumbai Sensex drops steeply on Budget Day.
The Sensex on BSE finished 540.74 points, or 4.01%, lower at 12,938.09. The market was highly volatile and traded within a range of almost 500 points. The market-breadth was very weak as there were four decliners to every advancer. Of the 30 stocks in the Sensex, only ITC advanced, while the other 29 stocks declined. Of all the stocks, 598 stocks advanced, 1,900 declined and 32 were unchanged. The turnover on BSE was Rs 5,825.82 crore, higher than Rs 4,019.74 crore on Tuesday. On NSE, the turnover was Rs 12,686.73 crore, much higher than Rs 8,148.78 crore on Tuesday.

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