US market closed higher; Dow extend gains for seventh day

The US markets closed higher on Monday, with the Dow Jones Industrial Average extending its winning streak to seven days - it’s longest since December 2014. Trading volumes on Wall Street were thin, with most banks, federal institutions and the US bond market closed for the Columbus Day holiday. Chinese Finance Minister Lou Jiwei stated over the weekend at the International Monetary Fund’s annual meeting that it’s not yet a good time for the US to hike its interest rates as the global economy is still sluggish. Federal Reserve Governor Lael Brainard stated that the risks to the US economy are tilted to the downside, making it important the recovery is nurtured and interest rates are not raised prematurely. Brainard added that there was a risk-management argument to a policy of watching and waiting. While the Fed has the tools to combat an inflation shock if it emerges, the Fed can’t do much to support the US economy if international cross currents weigh on demand given that interest rates are already at zero.  The Fed governor refused to discuss the timing of when the Fed would hike rates, but her comments suggest that she likely is in the minority of Fed officials who do not see a rate hike in 2015, according to projections released at the September policy meeting.

Meanwhile, Federal Reserve Vice Chairman Stanley Fischer stated that US Federal Reserve policymakers are still likely to raise interest rates this year but that is an expectation, not a commitment, and could change if the global economy pushes the US economy further off course. Fischer added that considerable uncertainties surrounded the US economic outlook, particularly the drag on exports from slowing global growth, low investment caused by the decline in oil prices and what he called a disappointing recent drop in US job growth. He felt the US economy was still generating enough jobs to continue making progress towards the Fed’s goal of maximum employment and that inflation would eventually rise. But he also cautioned the group that the United States is now more exposed than ever to international events and that development in China and elsewhere had already influenced the Fed to delay a widely expected rate increase in September.

The Dow Jones Industrial Average rose by 47.37 points or 0.28 percent to 17,131.86, Nasdaq added 8.17 points or 0.17 percent 4,838.64, while the S&P 500 gained by 2.57 points or 0.13 percent to 2,017.46.

Indian ADRs ended in red, Infosys was down 1.27%, Dr. Reddy’s Lab was down by 0.45%, Wipro was down 0.30%, ICICI Bank was down 0.08% and HDFC Bank was down by 0.03%.