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US markets closed mostly up; oil rout resumes

20 Jan 2016 Evaluate

The US markets closed mostly higher on Tuesday, as the S&P 500 and Dow industrials managed to hold on to minor gains amid a renewed rout in oil prices that took the wind out of an early rally. Tuesday’s fleeting rebound in stocks after a brutal two-week start to the year came on report of a slowdown in Chinese economic growth which spurred stimulus hopes and comforted investors who had feared worse. Meanwhile, declining earnings continued to weigh on investor sentiment. On the economy front, a gauge of home builder sentiment remained steady at 60 in January. That was unchanged from a downwardly-revised reading in December. Readings over 50 signal improvement and readings in the low 60s show a gradual improvement, which should bode well for future home sales in the year ahead. The index is down from a 10-year high of 65 in October, but still higher than the overall 2015 average of 59. The sub-gauge that tracks current sales conditions rose 2 points to 67 in January, but the future sales component dipped 3 points to 63. Builders have gained confidence as the improving economy tugged the jobless rate to a 7-year low and started to nudge wages higher. Sales of new homes were stronger in 2015 than 2014.

Meanwhile, the International Monetary Fund has added to concerns about the health of the global economy by cutting its growth forecasts for the next two years and warning that recovery from the financial crisis could be derailed altogether if key challenges are mishandled. The Fund forecast that the world economy would grow at 3.4 percent in 2016 and 3.6 percent in 2017, both years down 0.2 percentage point from the previous estimates made last October. The Fund added that the outlook for an acceleration of US output was dimming as dollar strength weighs on manufacturing and lower oil prices curtail energy investment. It now projects US economic growth at 2.6 percent for both 2016 and 2017, down 0.2 percentage point in both years from the October forecast.

The Dow Jones Industrial Average added 27.94 points or 0.17 percent to 16,016.02, the S&P 500 was up by 1.00 points or 0.05 percent to 1,881.33 while, the Nasdaq was down 11.47 points or 0.26 percent to 4,476.95. 

The Indian ADRs closed mostly in green; Tata Motors was up 0.77%, HDFC Bank was up 0.36%, Infosys was up 0.16% and ICICI Bank was up 0.13%. On the other hand, Dr. Reddy’s Lab was down 0.22%.


 

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