The US markets closed lower on Wednesday, after Federal Reserve Chairman Ben Bernanke’s remarks to Congress damped speculation of more quantitative easing to help the economy. However, Nasdaq rose briefly above 3,000 for the first time since late 2000, after data showed the economy grew more than expected in the fourth quarter and as worries about Europe’s financial troubles ebbed. Meanwhile Bernanke told Congress that keeping monetary stimulus is warranted, he stated that rising gasoline prices are likely to push up inflation temporarily and the drop in the unemployment rate has been more rapid than expected. The US economy expanded at a 3 percent annual rate in the fourth quarter, more than forecast, and the Fed’s Beige Book survey also found that manufacturing continued to expand at a steady pace in January and early February. Besides, residential real estate markets and banking conditions are improving across most of the nation. Also, a gauge of business activity in the Chicago area was seen rising more than expected in February. Separately, US banks increased financing for commercial real estate in the fourth quarter for the first time in almost two years as default rates dropped and lenders shed more foreclosed properties.
The European Central Bank provided lenders with a larger amount of cash than forecast. The ECB allotted 529.5 billion euros ($712 billion) in three-year funds. The amount was slightly higher than expected, but not so high and stoked worries about stresses on the banks. The second funding operation in as many months increased the total liquidity in the financial system above €1 trillion that eased pressure on the sovereign bond rates. The second installment of the extended loan operation, called Long Term Repo Operation, is not expected to be followed by third round as the first two rounds have removed much of the market anxiety for now.
The Dow Jones Industrial Average closed lower by 53.05 points, or 0.41 percent, at 12,952.10. The S&P 500 lost 6.50 points, or 0.47 percent, at 1,365.68, while the Nasdaq was down by 19.87 points, or 0.67 percent, at 2,966.89.
Indian ADRs closed mixed on Wednesday, Infosys Technologies was down 0.83%, HDFC Bank was down 0.45% and Tata Motors was down 0.41%. On the flip side, Sterlite Industries was up 0.12% and Dr. Reddy’s Lab was up 0.07%.
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