US markets closed higher on solid jobs data

The US markets closed higher on Friday, with Dow ending a fraction below the closely watched 20,000 level, following a December US jobs report that investors interpreted as generally positive. All three benchmarks posted solid weekly gains, continuing the post-election rally on Wall Street. The main indexes maintained gains even after news reports that multiple people have been shot and killed at the Fort Lauderdale-Hollywood International Airport. On the economy front, the US added 156,000 new jobs in the final month of 2016 and worker pay rose at the fastest pace since the Great Recession, reflecting a surge in employment over the past six years that’s left many companies complaining about a shortage of skilled labor. The increase in hiring last month was spearheaded by health-care providers, financial firms, manufacturers, restaurants and shipping companies. The unemployment rate, meanwhile, edged up to 4.7% from 4.6% as more people entered the labor force in search of work. The steady gains in employment have finally started to push worker pay higher over the past year and a half. Average hourly wages jumped 0.4% in December to push the annual gain in 2016 to 2.9%, marking the fastest increase since a recovery that began in mid-2009.

On the other hand, the US trade deficit rose almost 7% in November as imports hit the highest level in nearly a year and a half, largely because of a gush of foreign oil. The nation’s trade gap climbed to $45.2 billion from a revised $42.4 billion in October. Imports increased 1.1% to $231.1 billion in November, marking the highest level since August 2015. Oil import surged by more than $1 billion and stood at $14.3 billion, reflecting an increase in prices as well as more supply. US exports slipped 0.2% to $185.8 billion, mainly owing to a big drop in shipments of large commercial aircraft produced by Boeing. The size of the trade deficit from September to November averaged $41.3 billion a month, virtually unchanged from the same three-month period in 2015. A higher deficit reduces the official scorecard for the economy known as gross domestic product.

Meanwhile, Chicago Fed President Charles Evans, one of the Fed’s most dovish policymakers, stated that he believes the central bank could raise rates three times this year if economic data comes in a bit stronger than he expects. Evans, who votes this year on the Fed's policy-setting panel, said that while he is hopeful that non-monetary policymakers can boost growth, if they do so without underlying structural improvements to productivity higher inflation could result. Richmond Fed President Jeffrey Lacker stated that the US Federal Reserve may have to raise interest rates quicker than markets currently predict should the Trump administration’s fiscal stimulus boost the economy. In his remarks, the Richmond Fed chief also forecast GDP growth of 2.0 percent in 2017, falling to 1.75 percent from 2018 onwards. He forecast that inflation this year would rise close to the Fed’s 2 percent target. Lacker has repeatedly advocated a swifter pace of rate rises than many of his Fed colleagues in order to ward off possible inflationary pressures. He said last month that the Fed would likely need more than three rate hikes in 2017.

The Dow Jones Industrial Average added 64.51 points or 0.32 percent to 19,963.80, Nasdaq gained 33.12 points or 0.60 percent to 5,521.06, while S&P 500 was up by 7.98 points or 0.35 percent to 2,276.98.

The Indian ADRs closed mostly in red; Dr. Reddy’s Lab was down 0.71%, Tata Motors was down 0.26%, HDFC Bank was down 0.22%, Infosys was down 0.20% and ICICI Bank was down 0.12%.