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US markets closed lower on profit taking

29 Dec 2016 Evaluate

The US markets closed lower on Wednesday, slumping in a broad decline as the market’s multi-week rally which has taken indexes to repeated records and the Dow within mere points of the 20,000 milestone stalled, witnessing some profit taking. All 11 of the S&P 500’s primary sectors ended lower on the day, while the benchmark index itself suffered its biggest one-day point and percentage drop since October. Financials and materials, two of the best-performing industries of late, were among the hardest hit, with both down about 1%. The final week of the year is typically a quiet one for markets, with few expected news events - such as central-bank meetings or corporate earnings - to dictate market direction.

On the economy front, stock-market investors have profited smartly from a postelection rally, but home buyers have fared worse after the surprise election of Donald Trump. The reason was the high mortgage rates. An index that measures pending home sales in the US fell 2.5% in November to the lowest level in nearly a year. The index dropped to 107.3 from 110 in the prior month, the National Association of Realtors said. Interest rates have risen on the expectation that a Trump administration will goose the economy with tax cuts and fresh spending, causing inflation to rise. The result has been a similarly sizable jump in mortgage rates at a time when there’s already a shortage of properties available for sale. The cost of a 30-year fixed mortgage has surged from 3.59% before the election to 4.36%. Rates are now almost a full percentage point higher compared to just six months ago. Pending home sales fell the steepest in the West, with demand also declining in the South and Midwest. Only the Northeast saw an increase in pending sales.

The Dow Jones Industrial Average dropped 111.36 points or 0.56 percent to 19,833.68, Nasdaq slipped 48.88 points or 0.89 percent to 5,438.56 and S&P 500 was down by 18.96 points or 0.84 percent to 2,249.92.

The Indian ADRs closed mostly in red; Tata Motors was down 0.72%, HDFC Bank was down 0.41%, Wipro was down 0.08% and Infosys was down by 0.08%. On the other hand, Dr. Reddy’s Lab was up 0.06%. 



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