11:30AM Market averages plunged, with the Nasdaq down 2%, Dow losing 1.7%.

U.S. stocks tumbled while bonds surged higher Friday following a deeply disappointing government report which showed payrolls in August fell unexpectedly for the first time in four years. The Dow Jones slipped more than 200 points.

The data raised optimism that the Fed will cut interest rates by at least 25 basis points at the central bank meeting on September 18. By the end of the year, the fed funds rate is expected to drop to 4.25%. In another report, the Commerce Department said U.S. wholesale inventories rose 0.2% in July, a slower pace than in June. as automotive, petroleum and other stockpiles fell.

The markets experienced broad based weakness, with the vast majority of sectors posting significant losses. Financial stocks moved sharply lower. American Express (AXP: chart) fell 3%, Lehman Bros (LEH: chart) lost 2.4%, Morgan Stanley (MS: chart) fell 1.2%, Merrill Lynch (MER: chart) lost 1.4%.

The tech sector also lost ground following the employment report. Apple (APPL: chart) fell 3% a day after its CEO replied to customer complaints about a quick price reduction on the iPhone and said the company would give $100 store credits to certain iPhone buyers.

In late morning trading, the Dow fell 221.60, or 1.66%, to 13,141.75. The Standard & Poor's 500 index fell 24.36, or 1.65%, to 1,454.19, and the Nasdaq composite index fell 53.79, or 2.06%to 2,560.53. Bonds, meanwhile, soared following the jobs report. The yield on the benchmark 10-year Treasury note skidded to 4.39% from 4.51% late Thursday.

Wholesale inventories rose 0.2%.

The Department of Commerce released its report on wholesale inventories and sales in the month of July on Friday, showing that inventories increased by less than economists had expected and sales rose modestly. The report showed that wholesale inventories rose 0.2 percent in July following a downwardly revised 0.3 percent increase in June. Economists had expected the growth in inventories to match the 0.5 percent increase originally reported for the previous month.

The modest increase in inventories came as a 1.5 percent increase in inventories of non-durable good more than offset a 0.5 percent decrease in inventories of durable goods. The Commerce Department also said that wholesale sales edged up 0.1 percent in July after rising 0.4 percent in June. While sales of non-durable goods rose 0.1 percent, sales of durable goods were unchanged. Subsequently, the report also showed that the wholesale inventories/sale ratio came in unchanged from the previous month at 1.11, although it is down from the July 2006 ratio of 1.13.


10:30AM New York, 8:00PM Mumbai – Wholesale inflation declined at the end of last week. Sensex gained 1.8% in the week.

Sensex in Mumbai trading lost 25.89 or 0.2% to close at 15,590.42 and CNX Nifty declined 9.10 or 0.2% to close at 4,509.50.

Of the stocks traded on Bombay Stock Exchange, 1,383 gained, 1,381 declined, and 71 were unchanged. Daily turnover in BSE trading increased to 4,863 crore rupees from 4,670 crore in Thursday trading. Of the 30 stocks listed in Sensex 20 declined and 10 gained. ITC with a gain of 1.6% led the gainers in the index and Cipla led the decliners in the index with a loss of 2.5%.

ICICI Bank is launching an infrastructure fund for $2 billion in the next three months. India has seen a surge of infrastructure funds in the last six months with at least three others funds are in the process of raising more than $1 billion. The country’s rickety infrastructure costs delays in transportation of goods at ports and distribution to the factory locations. Less than 2% of nation’s road network is four lane highways and most ports are antiquated by international standards.

Reliance Industries fell 1.3% to 1,957 rupees after the Communist and Samajwadi Parties expressed their reservation to a proposed price for natural gas sale from Krishna Godavari energy basin. The fertilizer minister Ram Vilas said that the proposed price of $4.33 mBTU is higher than the government is willing to pay. He did not elaborate or offered any alternative price for the purchase.

DLF, the largest property developer, is planning to spin off its subsidiary DT Cinemas in two years. The company plans to increase the number of cinema locations to 100 from seven and number of screens to 500 in the next two years.

Kirloskar Brothers surged 6% to 488 rupees after reporting that its joint venture has received 761 crore rupees project from Andhra Pradesh government. Kirloskar Brothers is likely to provide equipment of 114 crore rupees.

Saregama India soared 7% to 323 rupees after surging 21% in the last two trading days. The recent purchase of 10 lakhs shares by Sonata investments has cheered investors.

Hindoostan Spinning & Weaving Mills surged 10% to 64.75 rupees after adding 16% in the last three trading days. The recent deal to sell mill located in Mumbai for 350 crore rupees has driven the stock to a new high.

Eveready Industries India gained 27% to 54 rupees after it issued equity warrants at 8.8% premium to Thursday closing price of 53 rupees. The warrant holders will be entitled to one share at 53 rupees price.