US markets closed higher; Dow logs six days of gains in a row

The US markets closed higher on Friday, buoyed by gains in health-care and financial stocks that helped shares notch a fifth straight week of gains. Both the S&P 500 and the Dow industrials ended in positive territory for the year, while the Dow logged six days of gains in a row - the longest winning streak since early October. St. Louis Fed President James Bullard stated that the US central bank’s inflation and employment goals have essentially been met and it would be prudent to edge interest rates higher. Bullard added that he now feels inflation net of the oil price shock is reasonably close to target. He did not suggest when the next rate hike should occur. The bulk of Bullard’s talk revolved around a more theoretical discussion of whether the extended period of low rates in the United States and Europe has, instead of boosting demand and forcing inflation higher, created a situation where inflation will remain low until rates are increased. Bullard was among the majority of Fed policymakers who voted to keep rates steady at the central bank’s two-day meeting this week, and he has voiced concern recently about a drop in inflation expectations.

On the economy front, the US current-account deficit, a measures of the nation’s debt to other countries, fell 3.6% in the fourth quarter to $125.3 billion. The decline stemmed from a smaller trade deficit in goods and secondary income and an increase in the US surplus on services such as financial advice and tourism. Secondary income refers to transfers such as withholding taxes or fines that an economy receives without giving something back. Yet for all of 2015, the current-account deficit climbed 24% to $484.1 billion. The increase reflects the weaker US position in trade last year, when exports softened, a result of a stronger dollar and slower economic growth around the world. The current-account gap in the fourth quarter slipped to 2.8% from 2.9% as a percentage of gross domestic product. The current-account deficit in 2015, however, rose to 2.7% of GDP from 2.2%. That’s the highest level in three years, but well below the record 5.8% set in 2006.

Meanwhile, US consumer sentiment slipped to 90.0 in March - the lowest reading in five months - because of concerns about how fast the economy will grow in the months ahead as well as the expectation that gasoline prices will rise. The University of Michigan sentiment index had registered a final 91.7 in February. The last time the index was as low as it is now was in October. The sentiment index reached a post-recession peak of 98.1 in January 2015 but has averaged 92 since then. The all-time high for the sentiment index is 112, set in January 2000. The index hasn’t topped 100 since 2004.

The Dow Jones Industrial Average added 120.81 points or 0.69 percent to 17,602.30, the Nasdaq was up 20.66 points or 0.43 percent to 4,795.65 while, the S&P 500 gained 8.99 points or 0.44 percent to 2,049.58. 

The Indian ADRs closed in green; HDFC Bank was up 0.84%, Dr. Reddy’s Lab was up 0.62%, Tata Motors was up 0.49%, ICICI Bank was up 0.19% and Infosys was up by 0.19%.