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US markets slip further as investors took cautious stance on earnings

25 Oct 2012 Evaluate

The US market declined marginally on Wednesday, extending sharp losses that Wall Street had suffered the prior session, as quarterly earnings prompted investors to take a cautious stance though data signaling improvement in the housing sector and earnings from Dow Chemical Company helped lift sentiment in the early going. The Commerce Department reported that new-home sales rose in September to a more than two-year high that confirms the improving picture in the housing market. The sales of new single-family homes in the US rose 5.7% in September to a seasonally adjusted annual rate of 389,000, the highest pace since April 2010, when the first-time homebuyer tax credit was initially due to expire. Besides, the Federal Open Market Committee affirmed the Federal Reserve sticking with its monthly purchases of $40 billion in mortgage-backed securities until the labor market shows substantial improvement. The Federal Reserve stated that the economy is still growing modestly and unemployment remains elevated as it maintains $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion. Also, growth in employment has been slow, the Federal Open Market Committee stated at the conclusion of a two-day meeting in Washington. Fed Chairman Ben S. Bernanke is leading a third round of unprecedented bond-buying as he seeks to speed job creation for 12.1 million unemployed Americans.

In Europe, authorities are pushing Bankia (BKIA) group to impose losses on junior debt holders as part of Spain’s bank bailout by swapping their securities for stock in the nationalized lender. Separately, the euro zone downturn deepened at start of fourth quarter as PMI hit 40-month low, a survey by Markit Economics showed. The purchasing managers’ index for the manufacturing sector declined to 45.3 in October from 46.1 in September. The services activity index rose marginally to 46.2 in October from 46.1 in September. Though, euro zone consumer confidence improved in October.

The Dow Jones Industrial Average lost 25.19 points, or 0.19 percent, to close at 13,077.30, the S&P 500 finished down by 4.36 points, or 0.31 percent at 1,408.75, while the Nasdaq ended lower by 8.77 points, or 0.29 percent to settle at 2,981.70.

Indian ADRs closed mixed on Wednesday, Infosys was down by 0.31%, ICICI Bank was down 0.14% and Tata Motors was down by 0.14%. On the flip side, Dr. Reddy’s Lab was up by 0.12% and Tata Communications was up by 0.08%.

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