US markets closed lower; Nasdaq snaps 7-day winning streak

13 Jan 2017 Evaluate

The US markets closed lower on Thursday, with the Nasdaq snapping a seven-day winning streak as investors paused before the start of earnings season and a lack of policy detail in President-elect Donald Trump’s first formal news conference a day ago. Equity markets have been trading mostly sideways as investors begin to question the run-up in stock prices following the election on Trump’s promises of fiscal stimulus. On the economy front, the federal government ran a budget deficit of $28 billion in December, double the shortfall from the same month a year ago as both receipts and spending fell. Total receipts were down 9% for the month, with individual income tax collection flat and gross corporate tax collection lower. A decline in Federal Reserve earnings remitted to the Treasury also contributed to the smaller amount of receipts. For the fiscal year to date, the budget deficit totaled $208 billion, down from $216 billion in the year-ago period. The government’s budget year begins in October and runs through September. The Treasury said that the government would have run a deficit of $5 billion in December if not for calendar quirks that affected both benefit payments and receipts.

Moreover, the number of Americans who applied for unemployment benefits in the first week of 2017 rose by 10,000 to 247,000, but they remain near the lowest level in decades. Some people likely delayed filing claims between the Christmas and New Year’s Day, leading to the bump up in the week stretching from January 1 to January 7. Yet initial claims have been under 300,000 for 97 straight weeks, a streak last replicated in 1970 that shows no sign of ending. Many companies complain about a shortage of good help for hire and they are reluctant to let workers go amid stiff competition for labor. The less volatile four-week average of initial claims declined by 1,750 and stood at 256,500. Continuing jobless claims dropped by 16,000 to 2.1 million in the final week of 2016. That is down from 2.25 million at the start of last year.

Meanwhile, St. Louis Fed President James Bullard stated that the president-elect Donald Trump’s fiscal policy plans are more a story for 2018-2019 than this year. Bullard said growth in 2017 is pretty much baked in the cake. He said he thinks the economy remains in a low interest-rate and slow growth environment that is not going to change by snapping fingers. Bullard added he still thinks economic conditions will justify only one interest rate this year and the Fed has time to wait and see what develops. He does not believe that a low unemployment rate will necessarily boost inflation. He noted that the market still expects low inflation going forward. The recent pullback in the 10-year Treasury bond yields is the market settling down and waiting to see if Republicans can deliver on their promise of faster economic growth.

The Dow Jones Industrial Average lost 63.28 points or 0.32 percent to 19,891.00, Nasdaq dropped 16.16 points or 0.29 percent to 5,547.49, while S&P 500 was down 4.88 points or 0.21 percent to 2,270.44.

The Indian ADRs closed mixed; Tata Motors was down 0.57%, Dr. Reddy’s Lab was down 0.29% and Wipro was down 0.04%. On the other hand, HDFC Bank was up 0.14% and Infosys was up 0.06%.

US markets closed lower; Nasdaq snaps 7-day winning streak

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