US markets closed mostly lower on Friday; logs weekly gains

18 Mar 2017 Evaluate

The US markets closed mostly lower on Friday, but managed to post moderate weekly gains with investors awaiting further catalysts before jumping back into the market. The New York Federal Reserve said that it reduced its estimates on the US economy’s growth rates in the first and second quarter following the latest data on domestic retail sales, housing, construction and manufacturing. The regional central bank scaled back its view on first-quarter gross domestic product to 2.83 percent from 3.19 percent a week earlier, while it downgraded its GDP forecast for the second quarter to 2.53 percent from last week’s 3.00 percent. Minneapolis Federal Reserve Bank President Neel Kashkari, the lone dissenter against the US central bank’s decision this week to raise interest rates, said that the US economy is still falling short on employment and inflation. Even after the data support tightening, Kashkari said in a statement, the Fed should wait on raising interest rates until it publishes a detailed plan for how and when it will reduce its $4.5 trillion balance sheet. Kashkari’s approach appears to differ sharply from the one embraced by Fed Chair Janet Yellen and the majority of her fellow policymakers, who want to wait on any reductions in the balance sheet until they have lifted rates well away from zero. Kashkari added that because inflation is still short of the Fed’s 2-percent target and the labor market is still showing signs of slack, the Fed’s prior level of rates was appropriate.

On the economy front, most Americans are quite optimistic the US economy will do well in the days ahead, though Democrats remain down in the dumps two months into the Trump presidency. The index of consumer sentiment rose to 97.6 in March from 96.3 in February, based on a preliminary reading from the University of Michigan. Two months ago, the index shot up to its highest level since 2004, largely because of confidence among Republicans and independents. The March survey shows Republicans are still gung-ho. A gauge that examines what they expect in the next six months climbed to 122.4, a level that typically signals a new era of robust economic growth. The US economy is set to accelerate, if a gauge that historically correlates with future performance is on target. The Conference Board said its leading economic index rose 0.6% in February - the third straight gain of that magnitude - to reach its highest level in more than a decade.

On the other hand, a drop in utilities output after an unusually warm month dampened industrial production in February. Industrial production was flat in February. This followed a revised 0.1% decline in January, a bit faster than the original reading of a 0.3% decline. Industrial output has been in an up-and-down pattern since last fall. Compared with the same period of 2015, total production is up a slim 0.3%. Utilities output slumped 5.7% almost matching the 5.8% decline in January. Capacity utilization slipped to 75.4% in February from an upwardly revised 75.3% in January.

The Dow Jones Industrial Average lost 19.93 points or 0.10 percent to 20,914.62, S&P 500 dropped 3.13 points or 0.13 percent to 2,378.25, while the Nasdaq was up 0.24 points to 5,901.00.

The Indian ADRs closed mostly in green; Tata Motors was up 2.06%, HDFC Bank was up 1.90%, Infosys was up 0.49% and ICICI Bank was up 0.47%. On the other hand, Dr. Reddy’s Lab was down 1.36%.

US markets closed mostly lower on Friday; logs weekly gains

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