The US markets climbed higher on Friday, advancing for a second straight week, sending the Standard & Poor’s 500 Index to the highest level since 2007, as the Federal Reserve’s plan to buy mortgage securities fueled demand for riskier assets. Also, economic data showed US retail sales rose along with the cost of living in August. The nation’s consumers boosted their spending at retail outlets for a second straight month, but a large chunk of change went to pay for the higher cost of gasoline at the pump. The Commerce Department stated that retail spending rose by 0.9% in August following a revised 0.6% increase in July, marking the best back-to-back performance since the first two months of 2012. Consumer spending is vital to the economy, accounting for more than two-thirds of US growth. However, industrial production saw its biggest monthly percentage drop in over three years in August, in part due to Hurricane Isaac but also because of a big drop in car output. Industrial production fell 1.2% in August, the largest one-month percentage drop since March 2009, the Federal Reserve reported. Compared to August 2011, industrial production more broadly was up 2.8%.
In Europe, the euro zone finance ministers have assembled in Cyprus for a 2-day meeting to finalize the bailout program and conditions for Spanish bank bailout and review the progress of Greek austerity commitment. In the economy news, gross domestic product growth in the G20 area slowed to 0.6% in the second quarter compared with 0.7% in the first quarter. This marks the third consecutive quarter of slowing growth in the G20 area but masks diverging patterns across economies. GDP also contracted 0.1% in the European Union of 27 nations, and 0.2% in the euro zone. Separately, euro area annual inflation increased to 2.6% in August, from 2.4% in July. A year earlier the rate was 2.5%. From a month ago, inflation was 0.4% in August. In EU27, annual inflation increased to 2.7% in August from 2.5% in July. A year earlier the rate was 3%.
The Dow Jones industrial average gained 53.51 points or 0.40 percent to close at 13,593.40. The Standard & Poor's 500 gained 5.78 points or 0.40 percent to 1,465.77 and the Nasdaq composite inched up by 28.12 points or 0.89 percent to 3,183.95.
The Indian ADRs closed mostly in green, ICICI Bank was up by 1.81%, Tata Motors was up 1.45%, HDFC Bank was up by 0.97% and Infosys was up by 0.82%. On the other hand, Dr. Reddy’s Lab was down 0.75%.
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