The US markets ended lower on Monday, with the stocks suffering their biggest one-day slide in nearly seven weeks, energy producers lead declines as oil dropped to the lowest level since 2009, dragging down key benchmark indexes. Downbeat economic reports from China, Japan and Europe also dented sentiment. On the economy front, despite the best showing for jobs growth in close to three years, momentum in the jobs market may be slowing. The Fed’s labor-market conditions index - a model based on 19 different jobs-market variables, from the unemployment rate to average earnings to temporary-help employment - fell to a reading of 2.9 in November from 3.9 in October. That’s the worst reading since January, though above the index’s median reading of 1.85 from data that dates back to 1976.
Meanwhile, Dennis Lockhart, the president of the Atlanta Fed, stated that the sensible approach to hiking rates is to be patient in starting it and cautious about subsequent moves. Lockhart added that he was sticking with his forecast of a mid-year or later liftoff. It may be clearer in a few months when the US central bank should move and wage growth may be a good leading indicator. The Atlanta Fed president, seen as a middle-of -the-road pragmatist rather than a hawk or dove on the central bank, raised concern that forecasts of slowdown in the fourth quarter after strong growth over the past six months was not a signal of an onset of a slowdown.
Besides, Federal Reserve officials at their meeting next week are likely to affirm their plan to start raising short-term interest rates in 2015 and could begin the run-up to lift-off by dropping their assurance that rates will stay low for a considerable time. Fed Vice Chairman Stanley Fischer stated last week that it’s clearer that FOMC are closer to getting rid of that than we were a few months ago. New York Fed President William Dudley has avoided using the phrase in recent speeches and instead stated that the Fed should be patient before raising rates. Still, there will be a robust debate among officials on the issue at the December 16-17.
The Dow Jones Industrial Average lost 106.31 points or 0.59 percent to 17,852.48, the Nasdaq was down by 40.07 points or 0.84 percent to 4,740.69 and the S&P 500 dropped 15.06 points or 0.73 percent to 2,060.31.
Indian ADRs closed mostly in red on Monday; Infosys was down by 4.02%, Tata Motors was down by 0.57%, ICICI Bank was down 0.47% and Dr. Reddy’s Lab was down by 0.36%. On the other hand, HDFC Bank was up by 0.14%.
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