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US markets gain driven by earnings optimism

11 Jan 2012 Evaluate

The US markets edged higher on Tuesday, sending the Standard & Poor’s 500 Index to the highest level in five months as earnings optimism lifted broader indexes amid speculation that China may act to spur growth. Alcoa Inc., the biggest US aluminum producer and first company in the Dow to report results for the latest period, had a fourth-quarter loss excluding restructuring costs, matching the average projection. Besides, trade data from China’s government showed that nation’s import growth declined to a two-year low last month, raising expectations for monetary easing for the second-largest global economy.

Moreover, the Federal Reserve will pay $76.9 billion to the US Treasury as part of an annual dividend it remits after covering its own expenses from interest on its ballooning bond portfolio and other gains. Total assets on the Fed’s balance sheet stood at a near- record $2.92 trillion on January 4. The central bank expanded its portfolio by purchasing $2.3 trillion in US. Treasury debt, mortgage-backed securities and housing agency debt to push down longer-term interest rates once its benchmark lending rate hit zero in December 2008. In Europe, banks are preparing to meet revised capital guidelines this year and may need to raise at least 145 billion euros in the next eighteen months. Also, European leaders stated that they made progress toward implementing tougher budget rules across the euro zone. German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin yesterday indicating that they made progress on an agreement to implement new budget rules for the euro-zone. The German Chancellor is also scheduled to have talks with the International Monetary Fund Managing Director Christine Lagarde in Berlin.

The Dow Jones Industrial Average closed higher by 69.78 points, or 0.56 percent, at 12,462.50. The S&P 500 was up by 11.38 points, or 0.89 percent, at 1,292.08, while the Nasdaq closed up 25.94 points, or 0.97 percent, at 2,702.50.

Indian ADRs closed in green on Tuesday, ICICI Bank was up by 1.71%, HDFC Bank was up by 0.76%, Tata Motors was up by 0.75%, Dr Reddy’s was up by 0.68%, and Infosys technologies was up 0.58.  

 

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