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US markets slip despite better-than-expected employment data

03 Nov 2012 Evaluate

The US markets fell sharply on Friday, as cheer over better-than-expected employment data gave way to nervousness ahead of the US presidential election which is scheduled on November 06, 2012. Though the equity market remained buoyed at the open on data showing that the American economy created more jobs than expected in October, pointing to a gradual but steady improvement in the labor market but jitters prevailed as voters will now decide between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney. The Labor Department reported that nonfarm payrolls increased by 171,000 in October, more than the 120,000 rise expected. Hiring also rose faster than expected in the preceding two months than previously believed. Besides, factory orders increased 4.8% in September according to the latest data released by the Commerce Department. Excluding transportation, orders increased 1.4%. The September month increase was the largest gain in a year.

In Europe, the downturn in the euro zone manufacturing sector extended into a fifteenth successive month in October, final data released. The seasonally adjusted purchasing managers’ index fell to 45.4 in October from 46.1 in September, slightly above the earlier flash estimate of 45.3. Besides, the UK economy will contract slightly this year and is likely to grow just over 1% in 2013, the National Institute of Economic and Social Research stated in a quarterly report. The report estimated consumer price inflation to reach 2.7% this year and 2% in 2013. Also, the Romanian central bank decided to keep the monetary policy rate unchanged at 5.25%, as expected. Separately, Germany’s manufacturing output dropped for the eighth consecutive month in October. The Markit/BME Germany Purchasing Managers’ Index fell to 46 in October from 47.4 in September.

The Dow Jones Industrial Average lost 139.46 points, or 1.05 percent, to close at 13,093.20, the S&P 500 finished down by 13.39 points, or 0.94 percent at 1,414.20, while the Nasdaq ended lower by 37.93 points, or 1.26 percent to settle at 2,982.13.

Indian ADRs closed mostly in red on Friday, Tata Motors was down 0.26%, HDFC Bank was down by 0.14% and Infosys was down 0.11%. On the other hand, ICICI Bank was up 0.17% and Tata Communications was up by 0.03%.

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