US markets closed higher on easing geopolitical tensions

The US markets closed higher on Monday, led by a rally in small-cap companies, though continued tensions in Ukraine and the Middle East put a cap on the S&P 500’s gains. Monday’s rally is being described as a relief rally after a selloff during the previous two weeks. Among geopolitical worries, the situation in Iraq remained fluid, with air strikes slowing the advance of the militant group ISIS. Separately, Russia announced it would send a humanitarian convoy into Eastern Ukraine. That could put a temporary stop to gunfights between the Ukrainian forces and rebels in the region. Meanwhile, Fed Vice Chairman Stanley Fischer stated that the global recovery was disappointing, highlighting interest rates would stay lower for longer. Fischer spent a lot of time discussing Larry Summers view that the US economy might be stuck in a period of new secular stagnation and he concluded that the former Treasury Secretary might be right. In his speech, Fischer noted that there was surprising weakness from the supply side of the US economy - labor supply, capital investment and productivity. Fischer cautioned that productivity is hard to measure much less predict and it is unwise to underestimate human ingenuity.

The Dow Jones Industrial Average added 16.05 points or 0.10 percent to 16,569.98, Nasdaq was up by 30.43 points or 0.70 percent to 4,401.33, while the S&P 500 gained 5.33 points or 0.28 percent at 1,936.92. 

Indian ADRs closed mostly in green on Monday; Tata Motors was up by 2.87%, HDFC Bank was up 0.81%, Infosys was up by 0.60% and ICICI Bank was up by 0.47%. On the other hand, Dr. Reddy’s Lab was down 1.01%.