The US markets closed mostly higher on Monday, after data showed that activity in US manufacturing sector rose to its highest level in four months and as traders reacted to Federal Reserve Chairman Ben Bernanke’s comments on monetary policy. Chairman Ben S. Bernanke defended the Federal Reserve’s unprecedented bond buying in his first comments since the Fed renewed the purchases last month, stating that the program will spur growth, cut unemployment, help savers and support the dollar. Bernanke attempted to answer some of the fierce criticism and public unease facing the third round of purchases, known as quantitative easing or QE3. In a speech to the Economic Club of Indiana in Indianapolis, Bernanke tried to de-mystify the purchases, stating that the basic monetary policy strategy is the same as it has always been. Bernanke stressed that Fed has not abandoned its mission to keep inflation under control. He also stressed that the Fed’s pledge to keep rates low until mid-2015 was not a forecast of a weak economy over the next three years. Separately, Paul Volcker, former chairman of the Federal Reserve, stated that the US central bank’s latest bond-buying program isn’t creating inflationary pressure.
Meanwhile, the US manufacturing sector unexpectedly expanded in September reflecting stronger orders that ease concern that US economy will slow further. The Institute for Supply Management’s manufacturing gauge rose to 51.5 last month from 49.6 in August, the highest reading since May. Reading over 50 indicates that more manufacturers are expanding instead of contracting. The ISM had been below 50 for three straight months until the September reading.
The Dow Jones Industrial Average gained 77.98 points, or 0.58 percent, to close at 13,515.10, the S&P 500 finished up by 3.82 points, or 0.27 percent at 1444.49, while the Nasdaq ended lower by 2.70 points, or 0.09 percent to settle at 3113.53.
Indian ADRs closed in green on Monday, HDFC Bank was up 0.99%, Infosys was up by 0.92%, Dr. Reddy’s Lab was up 0.52%, Tata Motors was up by 0.48% and ICICI Bank was up by 0.23%.
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