US markets gain on encouraging economic data

The US markets closed higher on Friday, building on weekly and monthly advances, as largely upbeat US economic data offset overseas worries. The S&P and Dow notched their fourth up week in a row, representing their best streak since an eight-week advance in October and November. On the economy front, consumers cut spending in July for the first time in six months, a surprising drop that could lead to sharply lower third-quarter growth unless outlays rebound quickly. Consumer spending dropped a seasonally adjusted 0.1% last month. Consumers also saved more, as the savings rate climbed to 5.7% from 5.4% and reached the highest level since the end of 2012. The PCE price index rose a scant 0.1% in July, and the increase over the past 12 months was unchanged at 1.6%. Inflation spiked earlier in the year but has leveled off during the summer.

Meanwhile, Chicago PMI in August surged to a reading of 64.3 from 52.6 in July, recovering all the ground lost last month. Components for production, new orders and order backlogs all rose. The sharp bounce-back in August, with growth in output at the highest for nearly ten years, suggests that growth in the US economy will continue apace in Q3. Additionally, the final August reading on the University of Michigan/Thomson Reuters consumer-sentiment index rose to 82.5 from a final July level of 81.8.

The Dow Jones Industrial Average added 18.88 points or 0.11 percent to 17,098.45, the Nasdaq was up by 22.57 points or 0.50 percent to 4,580.27, while the S&P 500 ended higher by 6.63 points or 0.33 percent to 2,003.37. 

The Indian ADRs closed mostly in green on Friday; HDFC Bank was up by 0.74%, Tata Motors was up 0.62% and ICICI Bank was up by 0.45%. On the other hand, Dr. Reddy’s Lab was down by 0.15% and Wipro was down 0.04%.