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US markets closed mixed on earning concerns and European worries

03 Oct 2012 Evaluate

The US markets made a mixed closing on Tuesday, pressured by concerns with an eye on quarterly financial reports and guidance as the earnings season kicks into full gear starting next week, with earnings from Alcoa Inc. on October 9. Investors are also looking ahead at the meeting of central banks scheduled this week. Fed Chairman Ben Bernanke expressed his caution about the slow improvement in the labor market and weak economic recovery. Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve reaches for new tools to spur the three-year recovery and reduce unemployment stuck above 8 percent. However, US home prices saw their biggest year-on-year jump in August in six years, more evidence that the market recovery has gained traction. CoreLogic reported a 0.3% gain in prices in August, to take the year-on-year jump to 4.6%. The home price data released is broadly confirmed by other, less current measures from S&P/Case-Shiller and the Federal Housing Finance Agency that show a slowly recovering picture after a housing bubble burst that left prices 27% below peaks.

In Europe, Spain has replaced Greece, Ireland and Portugal as the main threat to the euro zone and the euro. Spain was prepared to seek a full bailout but that Germany was urging Madrid to hold off. If Spain does request a bailout, that would start to remove some of the uncertainty surrounding the Iberian economy, since it would pave the way for the European Central Bank to buy Spanish bonds and hold down borrowing costs. Separately, Greece faced more protests as troika inspectors and finance ministry struggled to finalize the details of austerity measures before the release of the next installment of loans. Greece is resisting the demand to implement additional 2 billion euros of spending and asking for more time but IMF has refused to accept it.

The Dow Jones Industrial Average lost 32.75 points, or 0.24 percent, to close at 13,482.40, the S&P 500 finished up by 1.26 points, or 0.09 percent at 1445.75, while the Nasdaq ended higher by 6.51 points, or 0.21 percent to settle at 3120.04.

Indian ADRs closed mostly in red on Tuesday, HDFC Bank was down 0.24%, Tata Motors was down by 0.21% and Wipro was down by 0.04%. On the other hand, ICICI Bank was up by 0.13% and Dr. Reddy’s Lab was up 0.04%.

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