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US markets surge as central banks take action against crisis

01 Dec 2011 Evaluate

The US markets surged on Wednesday, with the Dow industrials chalking up their best day in more than two and half years, as the Federal Reserve and five other central banks moved to help banks hit by Europe’s debt crisis. The Federal Reserve and the central banks of the euro area, Canada, the UK, Japan and Switzerland agreed to reduce the cost of offering dollar financing through swap arrangements. Investors perceived that the central banks are sending a message that they’ve identified the problem and they are working together. Such coordination could prevent a replay of the US financial systems near meltdown in 2008-2009. The market celebration was supported by the ADP employment report which found an increase of 206,000 jobs in November, the biggest jump since last December. The ADP just indicates that the economy is on somewhat firm ground.

Besides, in its Beige Book survey released, the Fed stated that the US economy expanded at a moderate pace in all but one of its 12 districts, led by gains in manufacturing and consumer spending. In the US, companies boosted payrolls in November by the most this year and US businesses expanded at the fastest pace in seven months. Another report showed the biggest gain in home- purchase contract signings in a year.

The Dow Jones industrial average gained 490.05 points, or 4.24 percent, to 12,045.70. The Standard and Poor’s 500 closed higher by 51.77 points, or 4.33 percent, to 1,246.96, while the Nasdaq composite gained 104.83 points, or 4.17 percent, to 2,620.43.

The Indian ADRs made a mixed closing on Wednesday, ICICI Bank was up by 1.14%, HDFC Bank was up by 1.11% and Infosys Technologies was up by 1.06%. On the flip side, Dr. Reddy’s Lab was down by 0.25% and MTNL was down 0.01%.

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