US markets slip further on global worries and corporate earnings concern

The US markets continued their losing streak on Thursday, as investors feared that worldwide economic slowdown may dampen earnings of domestic companies. Investors’ worries included the rising dollar; the coming fiscal cliff facing US policy makers; and concern about second-quarter earnings releases, as well as what corporate guidance would signal about the second half of 2012. Besides, the consumer confidence stagnated last week as scant improvement in the labor market left Americans more discouraged about the economy. Also, Bank of America Corporation cut its earnings estimates for the Standard & Poor’s 500 Index for 2012 and 2013, citing concern that lower commodity prices and slower global growth will weigh on corporate profits. Separately, US government stated that its budget deficit widened in June 38.7% to $59.7 billion from a $43.1 billion a year ago month. Revenues in the month increased 4.2% to $260.2 billion and expenditures jumped 9.3% to $319.9 billion. The deficit increased after July social security payments were shipped in the month of June due to the July 4 holiday.

On the other hand, first-time applications for jobless benefits fell by 26,000 last week to 350,000, the lowest since March 2008. First-time filings for unemployment benefits fell last week to the lowest level in more than four years, but the decline likely stemmed from fewer auto-sector layoffs than normal and other onetime factors that could soon be reversed. Jobless claims sank 26,000 to a seasonally adjusted 350,000 in the week ended July 7, the Labor Department stated.

In Europe, the latest statement from the ECB highlighted downside risks and the European industrial production rebounded unexpectedly. Euro-area industrial production unexpectedly rebounded in May as growth in Germany, Europe’s largest economy, more than offset a decline in France. German wholesale price inflation eased but French annual inflation remained unchanged in June. Output in the 17-nation euro area rose 0.6 percent from April, when it fell 1.1 percent, the European Union’s statistics office in Luxembourg stated. Besides, Italy sold €7.5 billion of debt at lower yields while Greek jobless rate rose to a record in April.

The Dow Jones Industrial Average closed lower by 31.26 points or 0.25%, at 12,573.30. The S&P 500 finished down by 6.69 points or 0.50%, to 1,334.76, while the Nasdaq closed down by 21.79 points or 0.75%, to 2,866.19.

The Indian ADRs closed in red; Infosys was down 4.87%, ICICI Bank was down by 0.80%, HDFC Bank was down 0.63%, Tata Motors was down 0.61% and Wipro was down by 0.44%.