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US markets closed higher as oil prices recover

25 Feb 2016 Evaluate

The US markets closed higher on Wednesday, following a rebound in crude-oil prices. Meanwhile, St. Louis Fed President James Bullard reiterated his opposition to further interest rate hikes given that US inflation expectations have fallen and threaten the US central bank’s credibility. Bullard said that he regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations. The so-called break-even expected inflation rate in five years’ time has dropped as global markets sold off this year, and investors are now predicting a price measure of less than 1.5 percent.

On the economy front, a reading of services activity in the US in February indicated contraction, a worrying sign that the blues that have hurt manufacturing may have spread to more domestically-oriented industries. The Markit flash US services purchasing managers index fell to a seasonally adjusted reading of 49.8 from 53.2 in January, marking the worst reading since the government shutdown in October 2013. Any reading below 50 indicates more respondents said conditions were getting worse than getting better.

Meanwhile, sales of new homes sank in January and the median price ticked down. But some details in the Commerce Department’s data pointed to underlying strength, and some healthy shifts in the market, that were masked by the weak headline. The home re-sales rose 0.4% to an annual 5.47 million rate in January. That was impressive by several measures. First, it beat expectations of a 5.30 million pace. It was higher than year-ago levels by 11%. And it was the second-highest monthly tally of the cycle.

The Dow Jones Industrial Average added 53.21 points or 0.32 percent to 16,484.99 the Nasdaq was up 39.03 points or 0.87 percent to 4,542.61 while, the S&P 500 gained 8.53 points or 0.44 percent to 1,929.80.   

The Indian ADRs closed mixed; Infosys was up 0.19%, Tata Motors was up 0.03% and ICICI Bank was up 0.02%. On the other hand, Dr. Reddy’s Lab was down 0.76% and HDFC Bank was down 0.44%.


 


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