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US markets closed lower on global worries

05 Jan 2016 Evaluate

The US markets closed lower on Monday, marking it the worst start to a new year in more than a decade. Investors dumped risky assets such as equities and piled into havens, bidding up prices of gold and treasuries following a rout in Chinese shares overnight as well as heightened tensions between Iran and Saudi Arabia that sparked a global equity selloff. Last summer, a severe selloff in China’s stock market sparked a global market rout, which was seen as one of the reasons the US Federal Reserve kept interest rates steady at its September meeting. On the economy front, the business of American manufacturers contracted in December for the second straight month, giving heavy industry a sour end to 2015. The Institute for Supply Management’s manufacturing index slipped to 48.2% last month from 48.6% in November. That’s the lowest reading since the last month of the Great Recession. Readings under 50% indicate more companies are shrinking instead of expanding. The ISM index has posted sub-50% readings for two straight months for the first time during an economic recovery that began in July 2009. Manufacturers have been hurt by a strong dollar, declining exports and shriveling demand by energy producers for drilling equipment in the wake of the plunge in oil prices.

Meanwhile, US construction spending sank 0.4% in November to a seasonally adjusted annual rate of $1.12 trillion. The October increase, originally reported as 1.0%, was revised down to 0.3%, although the level was revised up as the Commerce Department revised 10 years’ worth of data to account for a processing error. In November, spending was 10.5% higher compared to a year ago. Private construction was down 0.2% during the month, but 12.1% higher for the year. That was thanks in large part to strength in residential construction, up 0.3% in November and 10.8% for the last 12 months.

The Dow Jones Industrial Average lost 276.09 points or 1.58 percent to 17,148.94, the Nasdaq was down 104.32 points or 2.08 percent to 4,903.09 and the S&P 500 dropped 31.28 points or 1.53 percent to 2,012.66. 

The Indian ADRs closed in red; HDFC Bank was down 1.74%, Tata Motors was down by 1.14%, Dr. Reddy’s Lab was down 0.64%, Infosys was down 0.51% and Wipro was down by 0.34%.



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