US markets closed mostly lower; Dow ekes out modest gain

The US markets closed mostly lower on Tuesday, with the S&P 500 snapping a five-day winning streak to close slightly lower, while the Dow Jones Industrial Average managed to eke out a modest gain. On the economy front, a report on international trade showed the US trade deficit jumped almost 16% in August to $48.3 billion, largely because of a strong dollar that reduced exports to their lowest level in three years. A stronger dollar has already been blamed for weaker revenues at multinational companies over the past few quarters. A 2% drop in exports helped push the US trade deficit to a five-month high. Surging imports of the newest iPhones and other cellular devices also helped to enlarge the trade gap. The trade deficit averaged $45.1 billion from June through August - 8% higher than the $41.7 billion average in the same period a year earlier. That’s the second highest three-month average in the past three years, another reflection of the pain caused by a muscular US currency. A higher trade deficit is a drag on an economy and reduces gross domestic product. It means a country is producing fewer goods and services of its own or buying more from other nations.

Meanwhile, the International Monetary Fund has grown more pessimistic over the last three months over global growth, as declining commodity prices and increasing financial market volatility take their toll, particularly on emerging markets. The IMF’s new forecast for global growth this year and next was shaved by 0.2 percentage points each year, compared to the organization’s views from July. The US forecast from the IMF, of 2.6% growth this year and 2.8% next year, is a tenth of a percent higher for this year and two-tenths lower for 2016. The IMF forecast is a bit more optimistic than the Federal Reserve’s projection of 2.1% growth in 2015 and 2.3% growth in 2016.

The Nasdaq lost 32.90 points or 0.69 percent 4,748.36, the S&P 500 was down by 7.13 points or 0.36 percent to 1,979.92, while the Dow Jones Industrial Average rose by 13.76 points or 0.08 percent to 16,790.19.

Indian ADRs ended mostly in red, Dr. Reddy’s Lab was down by 1.18%, Infosys was down 0.44%, HDFC Bank was down by 0.32% and ICICI Bank was down 0.26%. On the other hand, Tata Motors was up by 0.60%.