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US markets edge marginally higher on good economic report

30 Aug 2012 Evaluate

The US markets edged marginally higher on Wednesday, as many investors remained sidelined following early reports on US economic growth. Also separate report from the National Association of Realtors showed pending home sales at their highest level in two years. Besides, investors also took note of the release of the Federal Reserve’s Beige Book, which found gradual economic expansion across the Fed’s 12 districts. The Beige Book indicated the economy is okay, at best, but it’s not rebounding so quickly that have to discount chances of some type of move from quantitative easing. The Beige Book reported that activity expanded gradually in July and early August across most regions and sectors, compared to the previous assessment of modest to moderate. The report, based on information collected on or before August 20, showed six districts with modest growth and three with moderate growth. The Philadelphia and Richmond districts reported slow growth in most sectors and declines in manufacturing, while the Boston Fed saw some slowdown after the previous report and mixed reports from business contacts. Moreover, the release of the central bank’s collection of anecdotes comes two days before Fed Chairman Ben Bernanke’s speech at an annual symposium in Jackson Hole, Wyo.

Meanwhile, the Commerce Department stated that gross domestic product rose at a 1.7% annual rate from April through June, up from its prior estimate of 1.5%. The US economy expanded somewhat faster in the second quarter than originally reported because of higher consumer spending and slower growth in imports. Separately, Commerce Department data released showed before-tax earnings at US corporations increased by 0.5 percent in the second quarter after a 2.7 percent drop in the prior three months. Earnings climbed 6.1 percent from a year earlier, slower than the pace of the previous two quarters.

In Europe, Spain's recession is deepening, yet borrowing costs continued to ease. Along with Greece, Spain has become a thorn in investors’ sides recently. Given its sluggish economy, high unemployment and troubled banking sector, investors are anticipating that the nation will be forced to seek a bailout soon. Germany’s inflation rose more than expected in August and French business confidence in manufacturing industry improved. Italian retail sales rose in June and Swiss leading indicators gained this month.

The Dow Jones industrial average gained 4.49 points, or 0.03 percent, to 13,107.50. The S&P 500 Index gained 1.19 points or 0.08%, to 1,410.49, while the Nasdaq Composite was up by 4.04 points, or 0.13 percent, to 3,081.19.

The Indian ADRs closed mixed on Wednesday, HDFC Bank was up 0.21%, Tata Motors was up 0.13% and Tata Communications was up 0.03%. On the other hand, Sterlite Industries was down 0.42% and Infosys was down 0.33%.

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