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US markets closed lower on weak GDP and pending home sales data

30 Oct 2015 Evaluate

The US markets closed lower on Thursday, succumbing to weaker-than-expected readings on gross domestic product and pending home sales, a day after the Federal Reserve signaled a December rate increase remains possible. The US economy cooled off in the third quarter as companies cut back production to prevent a worrisome buildup in inventories, particularly of goods destined for foreign markets. Gross domestic product - the value of everything a nation produces - rose at a 1.5% annual pace from July through September. The US had grown at a crisp 3.9% rate in the second quarter. Yet even as businesses showed more caution, consumers continued to spend money at steady clip, a sign they are not as worried. Consumer spending, the single largest determinant of US economic growth, rose and stood at 3.2% annual pace following an even larger gain in the second quarter. The latest report to show weakness came from the housing sector, where pending home sales fell for a second straight month in September. Even if the monthly report on pending home sales isn’t a top-tier indicator, this is a bit worrying. And it comes on the heels of a report showing new-home sales tumbled 11.5% last month. Housing has been one of the hottest performers in the economy. In the third-quarter GDP report released, residential investment grew at a blistering 6.1% pace.

On the other hand, the number of Americans who applied for unemployment benefits in late October remained near the lowest level in decades, reflecting the small number of layoffs taking place in the economy. Initial jobless claims in the period running from October 18 to October 24 edged up by 1,000 to a seasonally adjusted 260,000. New claims are registered when a person loses a job and applies for unemployment benefits. Weekly claims settled below the key 300,000 benchmark almost seven months ago and have fallen to levels last seen in the early 1970s, when the working-age population was much smaller. The average of initial claims over the past month, meanwhile, declined by 4,000 to 259,250 and touched the lowest level since December 1973. The four-week average smooths out fluctuations in the volatile weekly report and is seen as a more accurate predictor of labor-market trends.

The Dow Jones Industrial Average lost 23.72 points or 0.13 percent to 17,755.80, Nasdaq was down 21.42 points or 0.42 percent 5,074.27 while, the S&P 500 dropped 0.94 points or 0.04 percent to 2,089.41.

Indian ADRs ended mostly in red, HDFC Bank was down by 0.83%, Infosys was down 0.31%, ICICI Bank was down 0.08% and Wipro was down 0.07%. On the other hand, Dr. Reddy’s Lab was up by 1.97%.


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