The US markets closed lower on Monday, with two of three benchmark indexes off for a seventh in eight sessions, after the International Monetary Fund reduced its global economic outlook. The IMF lowered its 2013 forecast for global economic growth to 3.9 percent from 4.1 percent as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. The IMF marginally cut US outlook for the current year to 2% from 2.1% but warned that the looming disagreement among politicians may slowdown the economy further and to mitigate the risks of financial market disruptions policymakers must act well ahead of the deadline in October. Besides, the US retail sales fell in June for the third straight month as consumers cut spending on most goods and services, reflecting a sharp slowdown in economic growth in the second quarter. The retail sales slumped a seasonally adjusted 0.5% in June following declines in May and April. The last time the US experienced three straight monthly drops in retail spending was in the second half of 2008, midway through the Great Recession.
On the other hand, a gauge of manufacturing in the New York region in July expanded at a faster-than-anticipated pace. Manufacturers in the New York region stated that business improved modestly in early July, after barely expanding in June, according to a report released by the New York Federal Reserve Bank. The Empire State index rose to 7.4 in July from 2.3 in June. The index had fallen dramatically in June from 17.1 in May. Moreover, Bernanke on Tuesday will begin two days of testimony on Capitol Hill, with investors expecting the Fed chairman to reiterate what was stated in minutes of the central bank’s last policy meeting. Investors are speculating that Federal Reserve Chairman Ben S. Bernanke will hint at further stimulus at testimony before Congress.
In Europe, the IMF trimmed the UK outlook for this year to 0.2% from the previous estimate in April of 0.8%, held its forecast of 0.3% contraction for the euro zone, trimmed growth in China to 8% from 8.2% and for India to 6.1% from 6.9%. The leaders in the region await the approval of Spanish bank bailout later in the week while, German Constitutional Court is expected to approve the European plan to provide as much as €100 billion in aid to Spanish banks. On the economic front, annual inflation in euro-zone was 2.4% in June, unchanged from May, the latest report from Eurostat showed. A year earlier the rate was 2.7%.
The Dow Jones industrial average dropped by 49.88 points, or 0.39 percent, to 12,727.20. The S&P 500 Index lost 3.14 points, or 0.23 percent, to 1,353.64, while the Nasdaq Composite was down 11.53 points, or 0.40 percent, to 2,896.94.
Most of the Indian ADRs closed in red on Monday, Infosys was down by 0.88%, Tata Motors was down by 0.75% and HDFC Bank was down by 0.25%. On the flip side, Dr. Reddy’s Lab was up 0.41% and ICICI Bank was up by 0.03%.
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: