US markets gain shrugging off weak GDP data

30 May 2014 Evaluate

The US markets closed higher on Thursday, pushing the S&P 500 to an intraday high and its 13th record close this year, as investors shrugged off data showing the economy contracted in the first quarter and instead focused on better-than-expected jobless claims. The US economy contracted in the first quarter for the first time in three years, hampered by harsh weather that disrupted business and slowed construction. Yet the damage seems to be fading fast amid widespread signs that growth has accelerated in the spring. Gross Domestic Product, the sum of all goods and services produced by the economy, shrank by annual pace of 1% in the first three months of 2014. Initially the Government had reported last month that GDP rose at a seasonally adjusted 0.1% rate. Much of the economic activity that was delayed or disrupted in the first quarter, however, appears to be occurring now in the warmer spring months. On the other hand, the number of people applying for US unemployment benefits sank last week to the second-lowest level since the recession ended in mid-2009, suggesting continued improvement in a labor market that’s perked up in the early spring. Initial jobless claims fell by 27,000 to 300,000 in the week ended May 24. A year earlier, new jobless claims were running around 350,000 a week. The average of new claims over the past month declined by 11,250 and stood at 311,500 to mark the lowest level since August 2007.

Meanwhile, a gauge of pending home sales rose 0.4% in April -- the second consecutive gain after slumping since the summer -- signaling that sales of existing homes may pick up. The index of pending home sales hit 97.8 in April -- the highest reading since November -- compared with 97.4 in March. Despite April’s gain, the gauge was down 9.2% from a year earlier, hit by few homes available for sale and pricier properties.

The Dow Jones Industrial Average was up by 65.56 points or 0.39 percent, to 16,698.74, the Nasdaq Composite added 22.87 points or 0.54 percent, to 4,247.95 and the S&P 500 gained 10.25 points or 0.54 percent, to close at 1,920.03.

The Indian ADRs closed mostly in red on Thursday; Tata Motors was down 1.05%, Infosys was down 0.41% and Wipro was down by 0.19%. On the other hand, Dr. Reddy’s Lab was up by 0.49% and HDFC Bank was up 0.11%.

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