US Markets ended deep in the red on Friday with S&P 500 tumbling to two-month closing lows, while the Nasdaq hitting its lowest closing level in well over a month, amid renewed concerns about the outlook for interest rates. Sentiments remained dampened after comments from some Federal Reserve officials reignited worries about a near-term interest rate hike. Boston Fed President Eric said gradual tightening of monetary policy is likely to be appropriate to ensure the U.S. economy remains at the full employment level it is now approaching. Rosengren added that ‘a failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery’. Dallas Fed President Robert Kaplan also said the case for raising rates has strengthened in recent months and noted the markets have gotten plenty of notice the Fed is looking for opportunities to remove accommodation. The Fed is scheduled to hold its next monetary policy meeting in about two weeks, with two subsequent meetings scheduled for November and December.
Geopolitical concerns too weighed on the markets following North Korea's claim that it successfully tested a miniaturized nuclear warhead. While North Korea argued the test would provide protection against ‘threats and sanctions’ by U.S.-led hostile forces, China's state-run Xinhua news agency warned the communist nation that it will not benefit from war and instability in Northeast Asia. President Barack Obama condemned the test in the strongest possible terms, calling it a grave threat to regional security and to international peace and stability.
The Dow Jones Industrial Average slumped 394.46 points or 2.13 percent to 18,085.45, Nasdaq plummeted 133.57 points or 2.57 percent to 5,125.91, while S&P 500 was down by 53.49 points or 2.45 percent to 2,127.81.
The Indian ADRs closed in red; Tata Motors declined 1.59%, HDFC Bank dropped 1.14%, Dr. Reddy’s Lab shed 1.00%, Wipro slipped 0.22% and ICICI Bank was down by 0.14%.