US markets closed mostly lower ahead of central banks meet

28 Aug 2012 Evaluate

The US markets closed mostly lower on Monday, as investors waited for central banks to decide if the global economy is in need of further stimulus measures and also as Apple Inc. shares climbed on a $1 billion verdict, providing a lift to the Nasdaq Composite. Apple shares gained after the iPad maker won a patent fight with South Korean rival Samsung Electronics. Apple is the largest component of the Nasdaq Composite. On the economy front, an index of regional manufacturing activity from the Federal Reserve Bank of Dallas showed a narrower contraction in August than in July. The reading indicates an easing of the decline in business conditions for Texas-area manufacturers. Last month's reading had been the weakest in 10 months. Besides, investors have started eyeing on speech by Fed Chairman Bernanke as central bankers from around the world gather for the annual meeting in Jackson Hole, Wyoming. In this week, investors are also awaiting the release of personal income and spending and consumer sentiment data and the weekly jobless claims report.

Meanwhile, US banks with more than $10 billion in assets may get more time to institute internal stress testing required by the Dodd-Frank Act, US banking regulators stated. The regulators proposed rules in December and January to require the big banks -- holding companies under the Federal Reserve and national banks under the Office of the Comptroller of the Currency -- to start self-testing their portfolios against adverse scenarios annually. The proposals, which initially called for banks to conduct tests this year, may be revised with a September 2013 deadline. The extension would apply to banks between $10 billion and $50 billion in assets, according to the Fed, OCC and the Federal Deposit Insurance Corporation.

In Europe, investors are eager to hear from European Central Bank President Mario Draghi, who is expected to speak at Jackson Hole on Saturday. Investors shifted attention to the long expected central bank action to revive sovereign bond market after talks between leaders of Germany, France and Greece were inconclusive. The round of meeting among the European leaders last week is expected to lead to more meetings and delayed decision making, reflecting the fragmented power structure in Europe and lack of consensus among the members of euro zone. The French leader stressed that Greece must remain in the euro zone but did not clarify if he agreed with the Greek prime minister Antonis Samaras request of two more years to full its contract term obligations. Greece vowed spending cuts of worth €11.5 billion for 2013 and 2014 in exchange for €130 billion bailout from the European Union, the European Central Bank and the International Monetary Fund. But Greece is lagging in meetings its deficit target agreed at the time of the bailout. In economic news, UK home prices fell in August and German import price inflation declined unexpectedly and Swedish retail sales increased in July.

The Dow Jones industrial average lost 33.30 points, or 0.25 percent, to 13,124.70. The S&P 500 Index lost 0.69 points or 0.05%, to 1,410.44, while the Nasdaq Composite was up by 3.41 points, or 0.11 percent, to 3,073.19.

The Indian ADRs closed mostly in red on Monday, Tata Motors was down 0.59%, Infosys was down 0.42%, ICICI Bank was down by 0.41% and HDFC Bank was down 0.27%. On the other hand, Dr. Reddy’s Lab was up 0.08%.

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US markets closed mostly lower ahead of central banks meet

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