US markets closed lower ahead of FOMC meet

The US markets closed lower on Friday, as weak oil prices pressured energy shares, while anxiety ahead of next week’s central-bank meetings weighed on sentiment. The Federal Open Market Committee (FOMC) and the Bank of Japan are both scheduled to wrap up their policy meetings on Wednesday. The BOJ is seen as easing policy slightly, while the Fed is widely expected to keep rates on hold. The market is pricing in a 12% probability of a rate increase when the Fed’s policy group convene, according to CME Group data.

On the economy front, the government data suggested that inflation may be nearing a level that could encourage the Federal Reserve to raise interest rates. The Consumer Price Index rose 0.2% in August, driven by higher rents and a surge in health-care costs. Medical care rose 1%, the fastest rate since 1984. Excluding the volatile food and energy categories, so-called core consumer prices climbed 0.3%. Over the past year, overall consumer inflation has risen at a 1.1% rate, up from 0.8% in the prior month. Inflation-adjusted wages, meanwhile, fell 0.1% in August. They are up a scant 1.3% in the past 12 months. The consumer sentiment stayed the same in September, as expectations about an economy that continues to add jobs buoyed moderate optimism. The University of Michigan said its consumer sentiment index stayed at 89.5. The consumer assessment of the present got a little worse while the expectation for the future improved slightly.

Separately, the Federal Reserve stated that household net worth rose to $89.06 trillion in the second quarter, a rise of $1.07 trillion, or 1.2%. The gains were almost equally split between the $452 billion rise in equities and the $474 billion advance in the value of real estate. Compared to GDP, household wealth is at a record high. Debt also accumulated during the period. Household net debt rose by 4.4%, as consumer credit - mostly car and student loans - rose by 6.4%, while mortgage debt excluding charge-offs rose a more modest 2.5%.

The Dow Jones Industrial Average lost 88.68 points or 0.49 percent to 18,123.80, Nasdaq dropped 5.12 points or 0.10 percent to 5,244.57, while S&P 500 was down 8.10 points or 0.38 percent to 2,139.16. 

The Indian ADRs closed mostly in red; Tata Motors was down 0.57%, Dr. Reddy’s Lab was down 0.19%, ICICI Bank was down 0.15% and Wipro was down 0.12%. On the other hand, Infosys was up 0.03%.