US markets closed higher; Dow snaps 8 day losing streak

The US markets closed higher on Tuesday, with the Dow Jones Industrial Average snapping its eight-day losing streak, as investors’ cheered better-than-expected economic data. Attracting the most attention was a reading of consumer confidence in March, which soared to the highest level in more than 16 years. The Conference Board said its consumer confidence index leapt to 125.6 in March from 116.1 in February. Consumer confidence has taken off since the election of President Donald Trump, on the prospect of lower taxes and more infrastructure spending. Confidence has yet to be impacted by Congress’s inability so far to enact the president’s ambitions. The cutoff data for responses was March 16, before Republicans were forced to scrap a vote on repealing and replacing Obamacare.

Additionally, an early look at US trade patterns in February shows a nearly 6% drop in the nation’s trade deficit, reversing a big increase in the prior month. The trade gap in goods - services is excluded - fell to $64.8 billion in February from $68.8 billion in January. Wholesale inventories, meanwhile, jumped 0.4% in February and retail inventories also rose 0.4%. The government issues the advanced data to make it easier to estimate gross domestic product. The decline in the trade deficit and the increase in inventory production could give a boost to gross domestic product in the first quarter. US house prices roared to their highest in nearly three years as demand remains hot, especially in the west. The S&P/Case-Shiller 20-city index rose 5.7% in the three-month period ending in January compared to the same period a year ago, an acceleration from its 5.5% yearly increase in December. The 20-city index was up 0.2% for the month, or a 0.9% gain when seasonally adjusted. The national index, which just a few months ago regained the high last seen during the housing bubble of a decade ago, rose 5.9% for the year, a 31-month high.

Meanwhile, Fed Governor Jerome Powell said that the impact of the new Trump administration’s effect on the economy remains too uncertain for the US Federal Reserve to react or begin recasting its outlook. Powell added that uncertainty about the scope, the timing and the contents of President Donald Trump’s policies were making it difficult for Fed policymakers to assess what they might mean. Overall, Powell said he felt the economy was on a solid path that warranted continued interest rate increases this year. The Fed raised rates in March, and a majority of the central bank’s policymakers foresee at least two more increases this year.

Moreover, Fed Vice Chairman Stanley Fischer said the Federal Reserve is likely to raise short-term interest rates twice more before the end of the year. Fischer expressed continued unease with the protectionist rhetoric of the Trump administration. Fischer enlightened that the central bank was watching developments on Capitol Hill closely but said it was sensible for the Fed to take a wait-and-see approach toward tax cut and infrastructure spending plans. Kansas City Federal Reserve President Esther George on Tuesday said she needs to see more details on the Trump administration’s fiscal proposals before factoring them into her economic forecasts.

The Dow Jones Industrial Average added 150.52 points or 0.73 percent to 20,701.50, Nasdaq was up 34.77 points or 0.60 percent to 5,875.14, while S&P 500 gained 16.98 points or 0.73 percent to 2,358.57. 

The Indian ADRs closed mostly in green; HDFC Bank was up 2.80%, Tata Motors was up 1.41%, Infosys was up 0.47% and Wipro was up 0.33%. On the other hand, Dr. Reddy’s Lab was down 2.74%.