The US markets closed lower on Wednesday, as losses in the energy sector overshadowed the release of the minutes of the Federal Reserve’s policy-setting committee. Shares of energy companies dropped sharply after oil futures plunged to over 6-year low. The minutes from the meeting of the central bank’s Federal Open Market Committee, or FOMC, suggested that a September rate increase may be on the table, while noting that a minority of the policy makers recommended caution as global markets face headwinds from a slowdown in China, which has pummeled commodity prices. One argument made by supporters of a rate hike was that an appreciable delay in a tightening monetary policy would spark inflation or financial instability. But a minority of Fed officials counseled patience. They noted there were no grounds to think inflation would move back to the 2% annual target, particularly because of the strong dollar and recent drop in crude oil prices. The Fed has made clear that it wants to raise rates this year. Fed watchers are divided into two camps. Many think the Fed will move at the September 16-17 meeting, but others argue the central bank will wait until December.
On the economy front, the consumer price index, or the cost of living, rose a scant 0.1% in July to mark the smallest increase in three months. Yet the cost of housing, the largest expense for most Americans, continued to rise threatening bigger advances in consumer inflation in the near future unless prices ease up. The cost of shelter rose 0.4% last month, reflecting the biggest gain in more than eight years. And housing expenses have climbed 3.1% in the past 12 months, the largest annual increase since 2008. Excluding food and energy, so-called core consumer prices also advanced 0.1% in July.
The Dow Jones Industrial Average lost 162.61 points or 0.93 percent to 17,348.73, the Nasdaq dropped 40.30 points or 0.80 percent to 5,019.05, while the S&P 500 was down by 17.31 points or 0.83 percent to 2,079.61.
The Indian ADRs ended mostly in red on Wednesday, HDFC Bank was down by 0.58%, Tata Motors was down 0.26% and ICICI Bank was down 0.11%. On the other hand, Dr. Reddy’s Lab was up 0.58% and Infosys was up 0.16%.