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US markets slips on weak employment data

07 Jul 2012 Evaluate

The US markets slipped on Friday, with the Dow industrials and S&P 500 ending lower for the week after a report on jobs data heightened concern about a slowing economy, while Europe’s efforts to tame its debt crisis disappointed investors. Besides, the IMF stated that it is likely to lower its global growth outlook and issued a cautious view on the world economy as growth falters in the advanced and emerging economies. The Labor Department reported that US economy created 80,000 jobs in June. Hiring slowed sharply in the second quarter, with job growth averaging 75,000 a month versus 226,000 in the first quarter. The US created just 80,000 jobs - about one-third of them temporary - as evidence hardened that the economy has hit another rough patch. The unemployment rate was unchanged at 8.2%. The disappointing employment report adds to fresh worries about the US economy at a time when growth is slowing around the world and Washington is gridlocked about how to address the malaise.

In Europe, ECB President Mario Draghi stated that economic growth in the euro area continues to remain weak, with heightened uncertainty weighing on confidence and sentiment, while the risks surrounding the economic outlook for the euro area continue to be on the downside. Besides, the Italian government approved €4.5 billion in spending cuts for this year and also plans to save €10.5 billion in 2013 and €11 billion in 2014 by reducing expenditure. A total of €26 billion or $32 billion in savings is estimated over three years and will be achieved mainly through 20% cut in the number of public sector managers, 10% reduction in other public sector staff, limiting health care expenditure, and better allocation of human resources and materials to public administrations. Separately, Industrial production in Germany rose more than estimated but Spanish industrial production fell in May. French deficit narrowed in June.

The Dow Jones Industrial Average closed lower by 124.20 points or 0.96%, at 12,772.50. The S&P 500 finished down by 12.90 points, or 0.94%, to 1,354.68, while the Nasdaq closed down by 38.79 points or 1.30%, to 2,937.33.

The Indian ADRs closed mostly in red; Infosys was down by 1.04%, Tata Motors was down 0.57% and Dr. Reddy’s Lab was down 0.38%. On the flip side, Tata Communications was up 0.09% and ICICI Bank was up 0.08%.

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