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US markets gain on smaller than expected drop in factory orders

05 Feb 2014 Evaluate

The US markets gained on Tuesday, clawing back a fraction of their worst losses since June made a day earlier, as investors welcomed a smaller-than-expected drop in factory orders during December. The stock market had slumped on Monday after disappointing manufacturing data on the heels of emerging-markets rout stoked fears over a possible slowdown in the US economy. Investors have now started eyeing economic data scheduled to be released this week, beginning with the ISM services index and ADP jobs reports on Wednesday and ending with the closely watched nonfarm-payrolls report on Friday. On the economy front, orders for goods produced in US factories fell 1.5% in December. The government revised November’s growth to 1.5%. Orders for durable goods in December -- products meant to last at least three years -- fell 4.2% in December. Orders for nondurable goods rose 1.1%.

Meanwhile, two Federal Reserve district bank presidents signaled a decline in global stock markets probably won’t deter the Fed from further trimming bond buying that has pushed up central bank assets to $4.1 trillion. Chicago’s Charles Evans notified that policy makers probably face a high hurdle to deviate from $10 billion cuts in monthly bond buying at each of their next several meetings. Evans added that world financial markets should not be surprised at the Fed’s decision to keep tapering its third round of quantitative easing, or QE3, because the cuts come in response to improved momentum in the economy. Richmond Fed President Jeffrey Lacker stated that a decline in global stock markets probably won’t deter the Fed from further trimming bond purchases.

The Dow Jones Industrial Average gained 72.44 points or 0.47 percent to 15,445.24, Nasdaq added 34.56 points or 0.86 percent to 4,031.52, and the S&P 500 was up by 13.31 points or 0.76 percent o 1,755.20.

Indian ADRs closed in green on Tuesday; ICICI Bank was up 1.66%, Tata Motors was up by 1.06%, HDFC Bank was up 0.87%, Dr. Reddy’s Lab was up 0.63% and Infosys was up 0.54%.

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