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US markets inched higher on better housing data

20 Sep 2012 Evaluate

The US markets inched higher on Wednesday, supported by strength in the housing sector which confirmed the stabilization in the market that has been on the slide in the last four years, while energy stocks dragged on the market as oil futures fell. The sales of previously owned homes and work on single-family projects climbed in August to the highest levels in two years, signaling the residential real-estate market is contributing to the US economic recovery. Figures from the National Association of Realtors showed that the purchases of existing houses increased 7.8 percent to a 4.82 million annual rate, the most since May 2010. Meanwhile, two top Federal Reserve officials who opposed the latest round of Fed asset purchases have waded into tricky political waters by suggesting that lawmakers could tie the Fed’s hands if they wanted to block more asset purchases. Federal Reserve Bank of Dallas President Richard Fisher stated that the central bank’s third round of large-scale asset purchases has led to an increase in market expectations for higher inflation without more job creation. Fisher, who doesn’t vote on monetary policy this year, opposed the Federal Open Market Committee decision last week to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing.

In Europe, Germany completed its bond offering but markets were focused on the timetable and size of the larger bailout for Spain. Spain has been averse in asking for a bailout that will force the nation to cut more government spending and increase taxes, something that the current government will like to avoid. Separately, euro zone construction output fell and French leading economic index rebounded in July. Economic expectations in Switzerland declined slightly in September.

The Dow Jones industrial average gained 13.32 points or 0.10 percent to close at 13,578.00. The Standard & Poor's 500 gained 1.73 points or 0.12 percent to 1,461.05 and the Nasdaq composite inched up by 4.82 points or 0.15 percent to 3,182.62.

The Indian ADRs closed mostly in red, Infosys was down by 0.17%, Tata Motors was down 0.16% and ICICI Bank was down by 0.12%. On the other hand, MTNL was up by 0.04% and Tata Communications was up by 0.03%.

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