US markets slip on global concerns

14 Mar 2014 Evaluate

The US markets slipped on Thursday, the worst declines in more than five weeks, with S&P 500 closing below a key technical level and turning negative year-to-date. The sell off was mainly on worries about global tensions and more bad news out of China which overshadowed good news on the US economy. Investors are keeping an eye on a vote in Crimea this weekend when citizens will decide whether to stay with Ukraine or join Russia. Secretary of State John Kerry warned that US and Europe could take ‘very serious’ steps should there be no sign of resolution between Ukraine and Russia as the Crimea region prepares to vote this weekend on a separatist resolution. The US budget deficit narrowed in February after rising employment boosted individual taxes and the Federal Reserve delivered higher earnings on its portfolio. Spending exceeded revenue by $193.5 billion last month, compared with a $203.5 billion deficit in February 2013. The deficit totaled $377.4 billion in the first five months of fiscal 2014, compared with a $494 billion shortfall from October 2012 through February 2013.

On the economy front, the number of people who applied for US unemployment benefits in the first week of March fell to the lowest level in more than three months, perhaps a sign of an uptick in labor-market conditions. Initial jobless claims fell by 9,000 to 315,000 in the period of March 2 to March 8. The average of new claims over the past month, a more reliable gauge than the volatile weekly number, also sank to a three-month low. The four-week average declined by 6,250 and stood at 330,500. Sales at US retailers rose in February for the first time in three months as shopper’s boosted purchases of a variety of goods after being cooped up by one of the harshest winters in years. Retail sales rose a seasonally adjusted 0.3% last month. The bounce back in sales partly offset declines in January and Dec ember that turned out to be worse than previously reported. The sales drop in January was revised to a 0.6% from 0.4% and the decline in December was put at 0.3% instead 0.1%. Excluding the large auto sector, retail sales rose 0.3%. The auto sector generates about one-fifth of all retail spending.

Meanwhile, US import prices spiked in February, as cold weather caused a surge in demand for imported fuels that heat homes and businesses. The price of imported goods and services overall climbed 0.9 % in February compared a month earlier. That matched the largest one-month jump since August 2012. Despite the latest surge, import prices over the longer term are weak, reflecting subdued growth across the global economy. From a year earlier, import prices were down 1.1% in February. Separately, US business inventories rose in January, but a drop in sales meant it was now taking the longest time since late 2009 to move goods from shelves. The inventories rose 0.4% after increasing 0.5% in December. Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos, which go into the calculation of GDP, gained 0.7%.

The Dow Jones Industrial Average lost 231.19 points or 1.41 percent, to 16,108.89, the Nasdaq Composite was down by 62.91 points or 1.46 percent, to 4,260.42, while the S&P 500 dropped 21.86 points or 1.17 percent, to close at 1,846.34.

The Indian ADRs closed in red on Thursday; Infosys was down by 1.51%, ICICI Bank was down 1.16%, Tata Motors was down by 0.63%, Wipro was down by 0.38% and HDFC Bank was down 0.19%.

US markets slip on global concerns

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