US markets drop on Cyprus worries

The US markets slipped on Thursday, suffering their biggest drop in nearly a month, pressured by weak euro-zone economic data, escalating worries over the banking crisis in Cyprus, as well as disappointment with Oracle Corporation on reporting a surprising decline in revenues for its third fiscal quarter, along with a disappointing forecast. There were however encouraging reports on the economy front, the number of Americans who applied last week for new unemployment benefits rose slightly but clung near a five-year low, another indication that fewer people are losing their jobs. Initial jobless claims rose by 2,000 to a seasonally adjusted 336,000 in the week ended March 16. The average of new claims over the past month which irons out some of the weekly volatility, declined by 7,500 and stood at 339,750. That is the lowest level since February 2008. The US flash manufacturing purchasing managers index rose to a 54.9 reading in March from 54.3 in February. A level above 50 indicates an expansion in activity. New orders and employment accelerated in March, while output expanded at a slower rate. Additionally, with 8 out of 10 indicators climbing, the Conference Board’s leading economic index grew 0.5% in February, marking the third straight month of gains. The gain was stronger than the 0.4% forecast, and the rise came after an upwardly revised January gain of 0.5%.

Separately, Business conditions for manufacturers in the Philadelphia region improved in March and companies are somewhat optimistic about the sales picking up in the near future. The Philadelphia Federal Reserve’s business-activity index rose to 2.0% this month from negative 12.5% in February, marking the first positive reading in three months. Readings above zero indicate more firms are expanding instead of contracting. Besides, Existing-home sales rose in February to reach the highest rate in more than three years, another sign of a strengthening housing market, as inventories posted an unusually large gain in the month. The National Association of Realtors said existing-home sales rose 0.8% in February to a seasonally adjusted annual rate of 4.98 million, hitting the highest level since November 2009. Home prices also climbed a seasonally adjusted 0.6% in January, and increased 6.5% from the same period in the prior year, the Federal Housing Finance Agency reported. The data is compiled using only mortgages backed by Fannie Mae and Freddie Mac.

In Europe, the euro-zone finance ministers known stated that they stand ready to discuss a new proposal with Cyprus, which they expect the Cyprus authorities to present as rapidly as possible. The European Central Bank warned it would withdraw a liquidity lifeline to the nation’s banks if it hasn’t reached a deal with the European Union and International Monetary Fund by Monday. Besides, data from Markit showed activity in Germany’s manufacturing sector unexpectedly contracted in March. The preliminary manufacturing purchasing managers’ index, or PMI, dropped to a three-month low at 48.9, sending the sector back into contraction territory.

The Dow Jones Industrial Average lost 90.24 points or 0.62 percent to 14,421.50, the S&P 500 slipped 12.91 points or 0.83 percent to 1,545.80 and the Nasdaq dropped 31.59 points or 0.97 percent to 3,222.60.

The Indian ADRs closed mostly in red on Thursday, Infosys was down by 1.22%, Tata Motors was down 0.73%, HDFC Bank was down 0.65% and Dr. Reddy’s Lab was down 0.54%. On the other hand, Wipro was up 0.03%.