The US markets closed lower on Tuesday, with the Dow and the S&P 500 logging their first back-to-back declines since late January, as sharp losses in energy and telecommunications sectors dragged on the broader market. On the docket are the all-important nonfarm payrolls data on Friday and two major central bank meetings from the European Central Bank on Thursday and the Federal Reserve next week. The market is pricing in a nearly 90% chance of an increase of benchmark interest rates when the Fed convenes its two-day meeting March 14-15. The Paris-based Organisation for Economic Cooperation and Development (OECD) forecasted US economic growth would pick up this year and the next on fiscal stimulus plans. In its Interim Economic Outlook, the agency said it sees US real GDP growth of 2.4% in 2017 and 2.8% in 2018. The US economy grew an estimated 1.6% last year. The OECD said US domestic demand would be boosted by increased household wealth and a pick-up in oil output. The Paris-based agency predicted global growth would accelerate to 3.3% from 3.0% in 2016 and to 3.6% in 2018.
On the economy front, the US trade deficit shot up in January to a five-year high, underscoring the daunting problem faced by a Trump administration determined to reduce the gap. The trade deficit rose 9.6% to $48.5 billion in January from a revised $44.3 billion in December. The wider deficit was spurred by a 2.3% increase in imports of consumer goods such as cell phones from China and other countries. The higher cost of oil also boosted the value of US imports. Imports totaled $240.6 billion in January. US exports, meanwhile, rose a smaller 0.6% to $192.1 billion. Exports of cars and trucks, oil and soybeans all rose sharply. Both imports and exports hit the highest marks since December 2014, offering more evidence that trade globally is picking up. A slowdown in trade over the past few years was a reflection of weaker economic conditions around the world.
Meanwhile, consumer borrowing rose at the slowest pace in more than five years in January, suggesting the economy’s growth engine may be running closer to empty than previously believed. Total consumer credit increased $8.8 billion in January to a seasonally adjusted $3.77 trillion, posting an annual growth rate of only 2.8%. That is the slowest monthly growth rate since August 2011. The data may reflect renewed consumer uncertainty. That could hit the economy, as consumer spending makes up about 70% of gross domestic product. The tepid increase in consumer borrowing was also below economists’ estimates for an $18.3 billion gain in January. Consumer credit increased a revised $14.8 billion in December.
The Dow Jones Industrial Average lost 29.58 points or 0.14 percent to 20,924.76, Nasdaq was down 15.25 points or 0.26 percent to 5,833.93, while S&P 500 dropped 6.92 points or 0.29 percent to 2,368.39.
The Indian ADRs closed mostly in red; HDFC Bank was down 0.47%, Dr. Reddy’s Lab was down 0.34%, Infosys was down 0.12% and ICICI Bank was down 0.07%. On the other hand, Tata Motors was up 0.17%.