US markets closed up on signs of strengthening economy

The US markets closed higher on Thursday, as data showed improvements in the American economy which overshadowed concern over weaker growth overseas. On the economy front, the number of people who applied for new unemployment benefits totaled fewer than 300,000 for the 10th straight week, reflecting the low level of layoffs in the US economy as growth gradually picks up. Initial jobless claims fell by 2,000 to a seasonally adjusted 291,000 in the week ended November 15. Over the past month, meanwhile, the average of new claims rose by 1,750 to 287,500. The four-week average reduces seasonal volatility in the weekly data and is seen as a more accurate barometer of labor-market trends. Also, Labor stated that continuing claims decreased by 73,000 to a seasonally adjusted 2.33 million in the week ended November 8. Continuing claims reflect the number of people already receiving benefits. The Philadelphia Fed’s manufacturing index jumped to 40.8 in November from 20.7 in October. This is the highest reading of activity since December 1993. Any reading above zero indicated expansion. Both new orders and shipments rose sharply in November. Labor market indicators also improved. The two price measures moderated. Besides, the leading economic index jumped 0.9% in October, the Conference Board stated, after a gain of 0.7% in September and a flat reading in August. The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015. The leading economic index is a weighted reading of 10 different indicators. Sales of existing homes rose 1.5% in October to a seasonally adjusted annual rate of 5.26 million, the highest level since September 2013, supported by low interest rates, more homes on the market and slower price growth. Separately, US consumer prices were flat in October as plunging gasoline costs offset increases in housing, medical and airline fares. The pace of inflation over the past 12 months was unchanged at 1.7% in October, but that’s down from two-year high of 2.1% earlier in the year. Energy prices dropped a seasonally adjusted 1.9% - the fourth straight decline - led by a 3% reduction in gasoline. Food prices rose 0.1%, the smallest gain in fourth months. The core CPI, which excludes volatile food and energy costs, rose by 0.2% last month. Americans are paying more for housing, especially rent, while costs also increased last month for household furnishings, airline tickets and medical care, including prescription drugs. However, the Markit Economics flash manufacturing purchasing managers index for the US fell to a 54.7 reading in November from 55.9 in October. This is the third straight monthly decline in the index, which is similar in design to the Institute for Supply Management manufacturing index. The index is now at its lowest level since January although any reading above 50 indicates expansion. Meanwhile, Federal Reserve Bank of St. Louis President James Bullard stated that low inflation in the US economy is no longer enough to justify the current rock bottom setting for short-term interest rates, and he repeated his view that rates should be lifted off their current near zero levels early next year. Bullard added that labor markets continue to improve and are approaching or even exceeding normal performance levels. Bullard took stock of the robust gains seen in the job market, which have come at a time where inflation has run persistently below the Fed’s 2% price rise target. Dow Jones Industrial Average added 33.27 points or 0.19 percent to 17,719.00, Nasdaq was up by 26.16 points or 0.56 percent to 4,701.87 while, S&P 500 ended higher by 4.03 points or 0.20 percent to 2,052.75.    The Indian ADRs closed mostly in green on Thursday; HDFC Bank was up by 0.28%, Dr. Reddy’s Lab was up 0.21% and Tata Motors was up 0.10%. On the other hand, Infosys was down by 0.97% and Wipro was down 0.05%.