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US markets slip as leaders diverge on Euro crisis talks

25 Sep 2012 Evaluate

The US markets closed lower on Monday, with the S&P 500 extending losses into a third session, as European leaders differed over how to tackle the long-running regional debt crisis. On domestic front, with revenue streams drying up and fewer places to cut costs, corporate America’s outlook for third-quarter earnings is looking grim. So far, 103 companies in the index have provided guidance for the third quarter. Of those, 80% have given guidance below estimates. Meanwhile San Francisco Fed President John Williams stated that, the Federal Reserve could expand its stimulus package to include assets other than mortgage-backed securities if the US economy fails to respond to its latest effort to jump-start the economy. Williams projected US gross domestic product to expand by about 1.75% this year, followed by acceleration in growth to 2.5% in 2013 and 3.25% in 2014. The unemployment rate is likely to ease to 7.25% by the end of 2014, while inflation remains below the Fed’s target of 2% for the next several years.

In Europe, Chancellor Angela Merkel and President Francois Hollande disagreed on a timetable for starting joint oversight of Europe’s banking sector. Also, Germany’s governing coalition showed growing exasperation with Spain, as a senior ally of Chancellor Angela Merkel stated that Prime Minister Mariano Rajoy must stop prevaricating and decide whether Spain needs a full rescue. Separately, the Ifo index, a gauge of German business confidence, declined more than forecast in September. The Munich-based institute recorded a reading of 101.4 for the month against a forecast of 102.3.

The Dow Jones industrial average lost 20.55 points or 0.15 percent to close at 13,558.90. The Standard & Poor's 500 lost 3.26 points or 0.22 percent to 1,456.89 and the Nasdaq composite inched down by 19.18 points or 0.60 percent to 3,160.78.

The Indian ADRs closed mixed, Infosys was down by 0.47%, Tata Communications was down 0.09% and Wipro was down by 0.09%. On the other hand, ICICI Bank was up by 0.41% and Dr. Reddy’s Lab was up 0.24%.

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