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US markets gain on some better-than-expected earnings

20 Jul 2012 Evaluate

The US markets edged higher on Thursday, extending their gains into a third session as better-than-expected earnings from International Business Machines Corporation and other companies offset weak economic data. IBM reported strong quarterly results and raised its outlook. However, ahead of the opening bell, the Labor Department reported that US jobless claims rose 34,000 last week to 386,000 reflecting typical summertime fluctuations in auto-industry employment. Applications for unemployment benefits are now back to somewhat elevated levels after falling two weeks ago to a four-year low, suggesting the labor market remains sluggish. Besides, sales of existing homes in June fell to the slowest pace since October, a decline that goes against the grain of more positive indicators from the housing market and one which a trade group blamed on foreclosure delays and tough mortgage availability. The National Association of Realtors stated that June sales dropped 5.4% to a seasonally-adjusted annual rate of 4.37 million, compared to an upwardly revised 4.62 million in May.

Moreover, the Philadelphia Federal Reserve stated an index tracking regional manufacturing activity improved to a negative 12.9 reading in July. That was still short of the rise to a negative 6.8 forecast and marked the third straight monthly reading below zero, indicating a contraction.

In Europe, Germany’s lower house of parliament approved the country’s participation in a $122.9 billion aid package for Spain’s ailing bank sector. Worries about a banking and fiscal crisis in Spain have dogged global equities markets for much of the second quarter. The measure passed with 473 in favor, 97 against and 13 abstentions. German Finance Minister Wolfgang Schaeuble earlier urged lawmakers to approve the package, saying it would help Spain deal with exaggerated nervousness in financial markets and contribute to financial stability across the euro zone.

The Dow Jones industrial average rose by 34.66 points, or 0.27 percent, to 12,943.40. The S&P 500 Index gained 3.73 points, or 0.27 percent, to 1,376.51, while the Nasdaq Composite was up 23.30 points, or 0.79 percent, to 2,965.90.

The Indian ADRs closed mixed on Thursday, ICICI Bank was up 0.44%, Infosys was up by 0.37% and Sterlite Industries was up 0.15%. On the flip side, Dr. Reddy’s Lab was down 0.44% and Tata Communication was down 0.26%.

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