The US markets closed mostly lower on Thursday, as investors assessed a poor report on the services sector along with worries about global growth, underlined by three central banks’ moves to lower borrowing costs. Yet in another signal of a slowing US economy, the services sector grew at its slowest pace since January 2010. The Institute for Supply Management stated its services index dropped to a reading of 52.1% in June from 53.7% in May. The manufacturing sector is typically seen as reacting more quickly to changes in the US economy than the services side. Also, as economic uncertainty sapped both consumer confidence and sentiment in June, shoppers also exercised caution with their wallets and delivered US retailers’ worst monthly sales in three years. Total June sales at stores open at least a year - a key performance metric that strips out the impact of new and closed stores - rose 0.1%, missing the 0.5% gain. However, the ADP employment report showed that US private-sector payrolls rose by 176,000 in June, well above expectations. Separate data indicated that weekly jobless claims declined by 14,000 last week to 374,000 - the lowest level in six weeks. The reports come ahead of Friday’s closely watched jobs report from the Labor Department.
In Europe, the major central banks delivered a further round of monetary stimulus in the face of a deepening slowdown, with the European Central Bank cutting its key lending rate to a record low and the Bank of England embarking on additional quantitative easing. The Bank of England raised the size of its asset- purchase program as the debt crisis in Europe hurts global growth. After the ECB cut rates to a record low of 0.75%, the central bank’s president Mario Draghi stated that downside risks to the euro-area growth outlook have materialized. The message sent by the coordinated cut in interest rates - China, ECB and BOE - reminded that global economic conditions remain weak.
The Dow Jones Industrial Average closed lower by 47.15 points or 0.36%, at 12,896.70. The S&P 500 finished down by 6.44 points, or 0.47%, to 1,367.58, while the Nasdaq closed up by 0.04 points, to 2,976.12.
The Indian ADRs closed mostly in red; Infosys was down by 1.46%, Dr. Reddy’s Lab was down 1.13%, Wipro was down 0.44% and HDFC Bank was down 0.35%. On the flip side, ICICI Bank was up 0.21%.
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