US markets gain on encouraging economic report

The US markets closed higher on Tuesday, as concerns over global crises gave way to optimism that central banks will continue to accommodate a recovering economy along with a better-than-expected jump in July housing starts and upbeat earnings reports. The Fed will release the minutes of its last gathering tomorrow, before central bankers meet in Jackson Hole, Wyoming. Fed Chair Janet Yellen and European Central Bank President Mario Draghi will be among the speakers at the annual symposium on monetary policy. On the economy front, construction on new US homes jumped 15.7% in July to reach the highest level in eight months, offering another piece of evidence that the housing market is recovering after an early-year lull. Housing starts climbed to an annual rate of 1.09 million last month from 945,000 in June. In another good sign, permits for new construction also rose sharply. They increased 8.1% to an annual rate of 1.05 million. Permits reflect how many new homes that companies plan to build in the near future.

Separately, US consumer prices rose slightly in July, led by highest costs of food and housing, but the overall pace of inflation cooled slightly after a sharp run up earlier in the year. The consumer price index rose a seasonally adjusted 0.1% in July. Food prices rose 0.4%, but energy costs declined for the first time since March to keep price pressures under wraps. The core CPI, which excludes volatile food and energy costs, also increased 0.1%.

The Dow Jones Industrial Average added 80.85 points or 0.48 percent to 16,919.59, Nasdaq was up by 19.20 points or 0.43 percent to 4,527.51, while the S&P 500 gained 9.86 points or 0.50 percent at 1,981.60.  

Indian ADRs closed mostly in red on Tuesday; HDFC Bank was down by 0.37%, Infosys was down by 0.29% and ICICI Bank was down 0.02%. On the other hand, Dr. Reddy’s Lab was up 0.75% and Tata Motors was up by 0.50%.