The US markets closed higher on Wednesday, with the S&P 500 recording its first gain in 2015 and snapping a five-day losing streak. Optimism on the street was followed by calmer oil and currency markets, which have been behind the brutal sell-off in global equities over the previous two sessions that left the Dow Industrial with the worst start to a year since 2008. Federal Reserve officials don’t need to see inflation pick up before hiking interest rates, according to minutes from the December meeting released, suggesting the central bank is looking through the current low inflation rate. Because lower energy prices and the stronger dollar will likely keep inflation below the Fed’s 2% target for some time, it was noted that the Federal Open Market Committee might begin normalization at a time when core inflation was near current levels. The core measure of the personal consumption expenditure index, the Fed’s favorite inflation gauge, was running at a 1.4% annual pace in November.
On the economy front, slumping demand for oil sends US trade gap to 11-month low. The nation’s trade deficit shrank 7.7% to a seasonally adjusted $39 billion - much smaller than street expected - mainly because of cheaper oil and the smallest amount of crude imports since 1994. Lower demand for imported oil helped offset a reduction in American exports to Asia and Europe amid a slowdown in economic growth outside the United States. Imports dropped 2.2% to $235.4 billion in November while exports fell 1.8% to a seasonally adjusted $196.4 billion in November.
Meanwhile, private-sector employers continued to add jobs at a solid pace in December, suggesting the labor market conditions remained strong. The private-sector added 241,000 jobs last month, up from 227,000 in November. A prior estimate pegged November’s increase at 208,000. In December, ADP reported private-sector service providers added 194,000 jobs, while goods producers added 46,000 jobs. By company size, small businesses added 106,000 private-sector jobs, large businesses added 54,000 and medium businesses added 70,000.
The Dow Jones Industrial Average added 212.88 points or 1.23 percent to 17,584.52, Nasdaq was up by 57.73 points or 1.26 percent to 4,650.47 while, S&P 500 gained 23.29 points or 1.16 percent to 2,025.90.
Indian ADRs closed in green on Wednesday; HDFC Bank was up 1.74%, Tata Motors was up by 1.52%, Infosys was up 0.66%, Dr. Reddy’s Lab was up by 0.40% and ICICI Bank was up by 0.25%.
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