The US markets closed lower on Thursday, as growth in US service industries slowed more than forecast and European Central Bank President Mario Draghi stated that economic outlook has worsened in the region. The growth in the US services sector slowed sharply in April, with a weakening pace of production, new orders and employment, according to a key index released. The Institute for Supply Management stated its services-sector index fell to 53.5% in April from a reading of 56.0% in March and the worst reading since December. Besides, US worker productivity decreased in the first quarter of 2012 as productivity increases were outpaced by the number of hours worked, according to data released by the US Labor Department. Output at non-farm businesses rose 2.7% and that coupled with a 3.2% increase in hours worked, resulted in a 0.5% decline in labor productivity.
However, a day before the Labor Department’s nonfarm payrolls report for April, the Labor Department reported first-time jobless claims fell to 365,000 last week. The number of people who applied for jobless benefits fell last week for the first time in a month to just slightly above a four-year low. Jobless claims declined by 27,000 to a seasonally adjusted 365,000 in the week ended April 28, the US Labor Department stated. Claims from two weeks ago were revised up to 392,000 from an original reading of 388,000.
In Europe, European Central Bank President Mario Draghi stated that economic outlook for the euro region remained at risk as the sovereign-debt crisis threatened growth. The central bank kept its benchmark rate at 1%, as had been expected. European Central Bank President Mario Draghi communicated that the economic outlook remains subject to downside risks, tied in part to ongoing tensions in some sovereign debt markets. Draghi stated the ECB will be on the lookout for signs that higher energy costs are being passed through to broader prices but stated that central bank sees risks to the medium-term inflation outlook as broadly balanced.
The Dow Jones Industrial Average closed lower by 61.98 points, or 0.47 percent, at 13,206.60. The S&P 500 lost 10.74 points, or 0.77 percent, at 1,391.57, while the Nasdaq was down by 35.55 points, or 1.16 percent, at 3,024.30.
Indian ADRs closed in red on Thursday; ICICI Bank was down 1.62%, Infosys Technologies was down 0.89%, Dr. Reddy’s Lab was down 0.76%, HDFC Bank was down 0.47% and Tata Motors was down 0.45%.
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