The US markets suffered a sharp decline on Monday, after investors had second thoughts about the last week summit of European leaders. On the contrary the economic data in US are outperforming expectations by the most in nine months. The markets had risen for two straight weeks as of Friday, when stocks rallied sharply following a European Union summit and accord to implement closer fiscal ties among the countries that use the euro. However, Moody’s Investors Service stated that the agreement was insufficient to reduce the odds of sovereign ratings downgrades in the euro region in the short to midterm. Fitch Ratings too stated that the inability by European Union leaders to devise a comprehensive fix to the region’s debt crisis had intensified pressure on debt ratings of euro-area nations.
November unemployment at the lowest level in more than two years and manufacturing running at the fastest pace in five months are among data that may dissuade Fed Chairman Ben S. Bernanke and fellow central bankers from pursuing a third-round of large scale asset purchases. At the same time, the Fed may still see significant downside risks for the economy as Europe’s financial crisis evolves. Moreover, Intel Corp cut its fourth quarter revenue forecast on hard disk parts shortages that are linked to Thailand floods.
The Dow Jones industrial average lost 162.87 points, or 1.34 percent, to 12,021.40. The Standard and Poor’s 500 closed lower by 18.72 points, or 1.49 percent, to 1,236.47, while the Nasdaq composite lost 34.59 points, or 1.31 percent, to 2,612.26.
The Indian ADRs closed in red on Monday, ICICI Bank was down by 2.02%, HDFC Bank was down by 1.48%, Tata Motors was down by 1.26%, Infosys Technologies was down by 0.89% and Sterlite Industries was down by 0.46%.
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