US markets fall; S&P dips below 2,000

The US markets closed lower on Thursday, with the optimism that sent indexes to new intraday highs after the European Central Bank’s surprise interest-rate cuts fizzled out by the end of the session. In the US, the day’s economic data painted a picture of continued economic growth. The US trade deficit fell in July and the June gap was revised lower, offering evidence that trade was slightly less of a drag on the nation’s growth during the summer than initially reported. The trade deficit with China, however, rose to a record high $30.9 billion. In July, the US trade deficit declined by 0.6% to a seasonally adjusted $40.5 billion. US services and other nonmanufacturing companies reported faster growth for August, with a gauge of their activity hitting the highest pace since 2008. The Institute for Supply Management stated that its gauge of non-manufacturers rose to 59.6% last month from 58.7% in July.

Besides, US productivity in the second quarter grew at a revised 2.3% annual pace instead of 2.5% as originally reported. The increase in output of goods and services was trimmed to 5.0% from 5.2%, while the rise in hours worked was revised down to 2.6% from 2.7%. Private-sector hiring was almost unchanged in August, pointing to a steady labor market. Private payrolls expanded by 204,000 jobs last month, down from 212,000 in July. The August tally missed expectations from economists polled, who had forecast an August gain of 215,000, compared with an originally reported increase of 218,000 in July. Additionally, the number of Americans who applied for unemployment benefits last week climbed slightly, but a very low level of layoffs continued to keep initial claims near an eight-year bottom. Initial jobless claims rose by 4,000 to 302,000 from August 24 to August 30. The average of new claims over the past month meanwhile, increased by 3,000 and stood at 302,750. The monthly average is less erratic than the weekly figure and offers a better look at underlying trends in the labor market.

Meanwhile, New Cleveland Federal Reserve President Loretta Mester sided with hawks on the central bank on a key issue: whether to scrap the forward guidance at the Fed meeting later this month. The Fed now pledges to keep rates near zero for a considerable period after the end of its bond-buying program. Mester argued that the new forward guidance should convey that the first rate increase will depend on economic conditions and the speed of its progress toward the Fed’s twin goals of low unemployment and stable prices. Mester’s comments put her in the camp of hawkish Philadelphia Fed President Charles Plosser, who dissented from the last Fed statement in late July because he wanted to scrap the considerable period language.

The Dow Jones Industrial Average lost 8.70 points or 0.05 percent to 17,069.58, Nasdaq was down by 10.28 points or 0.22 percent to 4,562.29, while the S&P 500 ended down by 3.07 points or 0.15 percent to 1,997.65.

The Indian ADRs closed mixed on Thursday; ICICI Bank was down by 0.19%, Wipro was down 0.18% and Infosys was down 0.11%. On the other hand, Dr. Reddy’s Lab was up by 0.08% and HDFC Bank was up by 0.07%.