US Market Closed Mixed As Economy Grew Less Than Forecast (28-Jan-2012)
The US markets closed mixed on Friday, but a late surge in financial shares helped the S&P 500 preserve a fourth week of gains after the White House stated it would expand a foreclosure-prevention program and hope grew for a Greek debt-deal. The foreclosure-prevention program, also known as the Home Affordable Modification Program, seeks to help struggling homeowners avoid foreclosure by allowing them to reduce monthly loan payments and, at times, reduce the amount they owe on their loan. Under the program, the lender voluntarily lowers the interest rate, and the government provides subsidies to the lender. The market started mostly lower after the US government stated the economy grew 2.8% in 2011's final quarter, less than the 3% predicted. The US economy gathered steam and expanded at 2.8% annual rate in fourth quarter after growing at 1.8% in the third. The economic growth has been uneven in the last six quarters. The economy for the first time is larger than it was before the recession.
Besides, the Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 75 in January, the highest level in almost a year, from 69.9 at the end of December. Separately, the US is likely to outperform Europe and Japan this year, according to the International Monetary Fund. The IMF this week kept its US forecast for 2012 unchanged at 1.8 percent. It predicted a 0.5 percent contraction in the 17-nation euro area and a 1.7 percent expansion in Japan.
In Europe, as per the reports, the Institute of International Finance, which represents private-sector holders of Greek bonds, has offered to accept a 70% haircut on its debt. However, Fitch Ratings cut the credit ratings of Italy, Spain and three other euro-area countries, saying they lack financing flexibility in the face of the regional debt crisis. Italy, the euro area's third-largest economy, was cut two levels to A- from A+. The rating on Spain was also lowered two notches, to A from AA-. Ratings on Belgium, Slovenia and Cyprus were also reduced, while Ireland’s rating was maintained.
The Dow Jones Industrial Average closed lower by 74.17 points, or 0.58 percent, at 12,660.50. The S&P 500 was down by 2.10 points, or 0.16 percent, at 1,316.33, while the Nasdaq closed up 11.27 points, or 0.40 percent, at 2,816.55.
Indian ADRs closed mixed on Friday, Infosys Technologies was down 0.52%, Dr. Reddy's Lab was down 0.37% and Tata Communications was down by 0.19%. On the flip side, Tata Motors was up 0.48% and Sterlite Industries was up 0.32%.
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