The US markets closed lower on Thursday, extending losses for the second day, amid concerns that improving economic indicators might force the Fed to start raising rates sooner than anticipated. The fourth-quarter GDP figures were revised up, while weekly jobless claims fell by more than expected to the lowest level in four months. The economy’s growth in the final three months of 2013 bumped up to a 2.6% annual pace from 2.4%, but the increase stemmed mainly from higher spending on health care and little else. The solid pace of growth in the waning months of 2013 - following a 4.1% advance in the third quarter - showed an economy that entered the new year with fresh momentum but still not fully healed more than four years after the end of the Great Recession. The US has expanded at an average pace of 3.3% since 1929, but growth has slowed to a 2.3% rate in the first four full years since the Great Recession ended.
Separately, applications for unemployment benefits fell last week to the lowest level in four months, offering further evidence US layoffs have slowed sharply and perhaps a hint that hiring is about to pick up. Initial jobless claims dropped by 10,000 to a seasonally adjusted 311,000 in the seven days ended March 22. The average of new claims over the past month, meanwhile, declined by 9,500 and stood at 317,750. However, slumping for an eighth month, a gauge of pending home sales fell 0.8% in February to the lowest level in more than two years, signaling that upcoming activity may slow. The index of pending home sales hit 93.9 in February - the lowest reading since October 2011 -- compared with 94.7 in January.
Meanwhile, Cleveland Fed president Sandra Pianalto stated that no single data point will determine how long the Federal Reserve can keep short-term interest rates low. William Dudley, president of the central bank’s New York stated that the Federal Reserve seems to be doing a better job communicating with markets now than it did last summer.
The Dow Jones Industrial Average lost 4.76 points or 0.03 percent, to 16,264.23, the Nasdaq Composite was down by 22.35 points or 0.54 percent, to 4,151.23, while the S&P 500 dropped 3.52 points or 0.19 percent, to close at 1,849.04.
The Indian ADRs closed mostly in red on Thursday; Tata Motors was down 0.49%, Dr. Reddy’s Lab was down 0.47% and Wipro was down 0.13%. On the other hand, HDFC Bank was up by 0.32% and ICICI Bank was up 0.27%.