US markets decline on hawkish comments by a Fed member

17 Jul 2013 Evaluate

The US markets edged lower on Tuesday, with the S&P 500 snapping an eight-session winning streak after a Federal Reserve member urged to reduced stimulus and Coca-Cola Company’s profit fell. Kansas City Fed President Esther George stated that central bank should begin trimming its asset-buying program sooner rather than later. Esther’s hawkish comments came a day before Fed Chairman Ben Bernanke’s semiannual testimony to Congress, with any hints the central bank is getting closer to tapering its monthly asset purchases likely to be scrutinized. On the economy front, the price of a broad array of goods and services edged higher in June to generate the biggest increase in consumer prices in four months, but signs of building inflationary pressure were hard to find in the US economy. The consumer price index rose by a seasonally adjusted 0.5% last month. Over the past 12 months, the core rate of inflation has risen a scant 1.6%, the lowest rate in two years. The overall inflation rate, however, climbed to 1.8% in June from 1.4% in May on a year-over-year basis.

On the other hand the Federal Reserve reported that industrial production rose 0.3% in June, led by a 2.2% gain in home electronics output and a 1.4% gain in automotive products, as well as a 0.8% gain in mining production. The production was stronger than the 0.1% expected. The rate of capacity utilization edged up 0.1 percentage point to 77.8%, higher than the 77.6% expected and a rate that was 0.1 percentage point above May but 2.4 percentage points below its 1972 to 2012 average. Additionally, led by sales expectations, a gauge of confidence among home builders rose in July for a third month, hitting the highest level in more than seven years,. The builder-confidence index rose to 57 in July -- the highest level since January 2006 -- from 51 in June. June’s result was the first above a key reading of 50 since 2006.

The Dow Jones Industrial Average lost 32.41 points or 0.21 percent to 15,451.80, the Nasdaq was down 8.99 points or 0.25 percent to 3,598.50 and the S&P 500 dropped 6.24 points or 0.37 percent to 1,676.26.

The Indian ADRs ended mostly in red on Tuesday, ICICI Bank was down by 1.49%, HDFC Bank was down 0.93% and Dr. Reddy’s Lab was down 0.24%. On the other hand, Infosys was up 0.12% and Tata Motors was up 0.02%.

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