The inevitable finally happened. After a six day rally US stock markets saw a decline on Thursday. The Dow declined by 94 points (0.9%) to end at 10,197.47 points. Other indices like the S&P and Nasdaq Composite also registered a decline. S&P declined by 11 points (1%) to close at 1,087.24, and the Nasdaq composite declined by 18 points (0.8%), to end at 2,149.02. The Dow had earlier increased by more than 500 points (5.3%) to reach 13-month high.

All sectors registered a decline with the energy and financial stocks registering the maximum decline. Energy sectors declined on the background of lower oil prices which declined by 3% to settle at $76.91 per barrel. The other declining sectors include Financials (down by 1.8%), Utilities (down by 1.3%), Industrials (down by 1.0%), Consumer Discretionary (down by 1.0%), Telecom (down by 0.8%), Materials (down by 0.6%), Health Care (down by 0.5%), Consumer Staples (down by 0.5%) and Technology (down by 0.4%)

Analysts and strategist feel that this decline was inevitable given the background of the current stock market rally which was not supported by fundamentals. As mentioned in our earlier brief the current gains in stock markets are unsustainable given the weakness in labour and housing market that are leaving customers hard on cash. Some analysts are of the opinion that the decline was inevitable given the highs that the market had reached.

Increase in dollar on Thursday also caused the markets to fall. A weaker dollar encourages investors to move into assets like stocks pushing the markets up. Vice versa a stronger dollar sends the markets down.

Going forward for the market there are some good news and bad news on the offering.  On the positive side jobless claim has seen a decline in the last week to 502,000 new filers which is the lowest level since January 3 as against an expectation of 510,000 claims. However fiscal deficit which reached $176.4 billion in October still continues to be a cause of concern.

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