The US markets closed higher on Tuesday, as sentiment were boosted by stronger housing data as well as widely anticipated news of a snap election in Japan and better-than-expected data from Germany. But the overall optimism was also supported by the fact that global central banks remain highly accommodative, providing liquidity and keeping key interest rates low. On the economy front, a gauge of confidence among home builders rebounded this month, rising four points to 58, reaching close to the highest level in nine years. Readings above 50 signal that builders, generally, are optimistic about sales trends. November marks the fifth consecutive month of above-50 readings. The gauge had dropped in October from a nine-year high hit in September. Also, National Association of Home Builders/Wells Fargo reported that its barometer of builders’ views on present sales of single-family homes rose five points to 62 in November. Meanwhile, a barometer of builders’ views on upcoming sales rose two points to 66. And a gauge of prospective-buyer traffic increased four points to 45.
Separately, falling energy prices continued to keep wholesale US inflation under wraps in October even as some retailers and wholesalers saw a sharp uptick in costs. US producer prices rose a seasonally adjusted 0.2% last month, but that was largely because of a spike in an erratic category that measures profit margins for wholesalers and retailers. Despite the higher-than-expected increase last month, the rate of wholesale inflation over the year fell to an eight-month low of 1.5%. That’s a more accurate barometer of wholesale price trends. The yearly rate of wholesale inflation had crept up to 2.1% as recently as last May before energy prices began a sharp retreat and a sustained rise in food costs slowed.
Meanwhile, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota is worried that the US central bank may be getting ready to end its ultra-easy money-policy stance too soon. Narayana Kocherlakota stated that the same worries that caused him to dissent at the most recent Federal Open Market Committee meeting in late October is likely to be in play again when officials meet next month. Last month, officials edged closer to the increase in short-term interest rates most officials think will come sometime next year. Kocherlakota opposed that evolution in Fed policy, and has argued repeatedly over recent weeks that he believes any move to raise rates next year would be a mistake given that inflation has been and will likely continue to be well below the Fed’s 2% target.
Dow Jones Industrial Average added 40.07 points or 0.23 percent to 17,687.82, Nasdaq was up by 31.44 points or 0.67 percent to 4,702.44 while, S&P 500 ended higher by 10.48 points or 0.51 percent to 2,051.80.
The Indian ADRs closed mixed on Tuesday; HDFC Bank was up by 0.70%, ICICI Bank was up 0.38% and Dr. Reddy’s Lab was up 0.16%. On the other hand, Infosys was down by 0.66% and Tata Motors was down 0.52%.
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