The US markets closed mostly higher on Thursday, recovering from early losses though Dow ended in red. The gains were induced with Bullard statement that the Federal Reserve should consider extending its bond-buying program beyond October to see how the US economic outlook evolves. Bullard isn’t a voting member this year of the rate-setting FOMC. However, Charles Plosser, president of the Philadelphia Fed stated that the Federal Reserve should hike rates sooner rather than later to avoid a chance that inflation will accelerate. Plosser added that waiting too long could also return Fed policy to an aggressive go-stop policy where the Fed would have to slam on the brakes. Plosser is a voting member of the Fed's policy committee this year. He has dissented from the last two Fed policy statements in favor of scrapping the pledge to keep rates low for a considerable time. Separately, Dennis Lockhart, the president of the Atlanta Fed stated that the US labor market remains far from normal with many companies preferring to use part-time workers. Lockhart raised concern that a survey of businesses in his district found that firms are using more part-time workers because of weak sales and also because of the perceived higher all-in compensation cost of full-time versus part-time workers. He added that for Fed policy purposes, the balance of evidence suggests the labor market is still far from normal, even if normal is not what it used to be.
On the economy front, initial claims for jobless benefits dropped to the lowest weekly tally in more than 14 years, showing that employers are laying off very few workers, a good sign for the labor market. The number of people who applied for US jobless benefits tumbled by 23,000 to 264,000 in the week that ended October 11, the lowest level since April 2000. The four-week average of new claims, a smoother barometer of labor-market trends, fell by 4,250 to 283,500, also reaching the lowest level since 2000. Industrial production climbed 1% in September, thanks to a big jump in utilities output during the month. The gain came after a 3.9% jump for utilities, a 1.8% gain for mining and a 0.5% gain for manufacturing output. It took the third quarter gain to an annual rate of 3.2%. Capacity utilization rose to 79.3% in September from 78.7% in August. August’s industrial production was revised to a 0.2% drop from an initially reported 0.1% decline.
Meanwhile, manufacturers in the Philadelphia region expanded a bit more slowly in October but growth was still strong. The bank stated its business-conditions index fell to 20.7 from 22.5. The Fed reported that the index for new orders rose to 17.3 from 15.5 in September, but shipments declined by 5 points to 16.6 and the employment index shrank to 12.1 from 21.2. Separately, a gauge of confidence among home builders pulled back this month from a nine-year high in September, falling five points to 54, according to National Association of Home Builders/Wells Fargo data. NAHB reported that its barometer of builders’ views on present sales of single-family homes fell six points to 57 in October. Meanwhile, a barometer of builders’ views on upcoming sales fell three points to 64. And a gauge of prospective-buyer traffic dropped six points to 41.
Nasdaq was up by 2.07 points or 0.05 percent to 4,217.39, S&P 500 ended higher by 0.27 points or 0.01 percent to 1,862.76 while, Dow Jones Industrial Average lost 24.50 points or 0.15 percent to 16,117.24.
The Indian ADRs closed mostly in red on Thursday; Tata Motors was down 1.81%, Infosys was down by 1.26%, HDFC Bank was down by 0.40% and ICICI Bank was down 0.24%. On the other hand, Dr. Reddy’s Lab was up by 0.04%.
