The US markets closed higher on Friday, with the Dow industrials reclaiming a close above 20,000 and the Nasdaq reached a record. Steps by President Donald Trump to roll back bank regulations and a stronger-than-expected January jobs report contributed to the upbeat sentiment. San Francisco Fed President John Williams said that the Federal Reserve can prepare to raise interest rates this year without knowing details of any new US fiscal policies because inflation is firming and the labor market looks good. Williams added that there is a lot of uncertainty around fiscal policy over the next two years. Yet given where we are today with some positive inflation pressures and good jobs growth, including in January, the Fed can make decisions based on that without actually knowing coming fiscal policies. Separately, a private poll showed that Wall Street’s top banks expect just two rate hikes from the Federal Reserve this year and see only modest risk to the US central bank being pressed into a more aggressive pace of monetary policy tightening. The poll of primary dealers - the 23 banks that do business directly with the Fed - indicated none expect the next rate hike to occur before the second quarter, despite a report on Friday that employers added far more workers than expected in January.
On the economy front, the US created 227,000 new jobs in January to mark the largest gain in four months, revealing an economy that still has plenty of vigor nearly eight years into a recovery that shows little sign of ending. Retailers, construction firms, financial companies and restaurants led the way in hiring in January. The increase in new jobs last month points to an economy that remains on a steady keel as the Trump administration gets underway. Growth has averaged about 2% a year since 2010, fueled by a surge in hiring that has reduced the unemployment rate near a nine-year low. The unemployment rate rose a notch to 4.8% last month, mostly because more people were looking for work. Job openings are near record high and that’s drawing a larger share of Americans back into the labor force. In January, hourly wages rose 0.1% to $26 an hour. Over the past 12 months wages have climbed 2.5% - faster than the less than 2% annual gains that prevailed through most of the recovery. The amount of time workers spent on the job each week was unchanged at 34.4 hours after December’s figure was revised up slightly. That’s more evidence the labor market is still going strong. Factory orders rose 1.3% in December. That was much stronger than the 0.5% increase forecasted, and was accompanied by a revision to the 2.4% decline in November, taking it to a 2.3% drop. But orders for all of 2016 were 1.4% below the full year tally for 2015. In December, total shipments rose 2.2%. That was the biggest increase in any month since December 2010.
Meanwhile, the service sector grew at a strong rate in January but a touch slower than in December and slightly below expectations. The Institute for Supply Management said its non-manufacturing index fell 0.1 points to 56.5%. Components measuring activity, new orders and inventories fell, while those for employment and deliveries edged higher. A separate report from Markit showed a rise to 55.6 in January, the best level since November 2015.
The Dow Jones Industrial Average added 186.55 points or 0.94 percent to 20,071.46, Nasdaq was up 30.57 points or 0.54 percent to 5,666.77, while S&P 500 gained 16.57 points or 0.73 percent to 2,297.42.
The Indian ADRs closed mostly in green; HDFC Bank was up 1.17%, Dr. Reddy’s Lab was up 0.16%, Infosys was up 0.13% and ICICI Bank was up 0.10%. On the other hand, Tata Motors was down 0.33%.