The US markets closed lower on Friday, as investors worried about whether the Federal Reserve will raise interest rates sooner rather than later. A rise in bond yields and a fall in gold may signal that bond investors are betting that the Fed might return to tightening monetary policy. Friday’s moves followed comments from San Francisco Fed President John Williams, who stated that he would like to see another rate increase sooner rather than later, suggesting he is in the camp of central-bank officials who would like a rate increase as soon as September. Williams added that in the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later. In his remarks, Williams enlightened the Fed couldn’t wait for inflation to emerge. If we wait until we see the whites of inflation’s eyes, we don’t just risk having to slam on the monetary policy brakes, we risk having to throw the economy into reverse to undo the damage of overshooting the mark.
On the economy front, the moderate but steady pace of expansion should continue for the rest of the year, according to an analysis of indicators that typically correlate with the future health of the economy. The Conference Board stated that its leading economic index rose 0.4% in July. The index, which consists of ten indicators from stock prices to jobless claims to hours worked in manufacturing, rose for a second month. Eight of the ten indicators rose, with the hours worked giving the biggest jolt to the index. Over the last six months, the index has grown at a pace equivalent to a 2.1% annual rate. The only negative contributor in July was average consumer expectations for business conditions.
The Dow Jones Industrial Average lost 45.13 points or 0.24 percent to 18,552.57, Nasdaq was down 1.77 points or 0.03 percent to 5,238.38, while S&P 500 dropped 3.15 points or 0.14 percent to 2,183.87.
The Indian ADRs closed mostly in red; Dr. Reddy’s Lab was down 0.54%, Tata Motors was down 0.46%, HDFC Bank was down 0.38% and Wipro was down 0.11%. On the other hand, Infosys was up 0.02%.
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