The US markets bounced back on Friday, boosted by a double-digit rally in Deutsche Bank AG shares, which were recovering from brutal losses in the previous session amid heightened concerns about the health of the German lender's balance sheet. US equities also garnered support from modest gains in oil prices after a turbulent week during that resulted in a tentative agreement to limit crude production by some of the world's biggest producer. Dallas Federal Reserve Bank President Robert Kaplan stated that while he has scoured the data, he sees no evidence the US economy is overheating, so the central bank can continue to be patient in raising interest rates. He sees some signs of distortions from low interest rates and they do worry him. Kaplan added that because of the aging population and other factors holding down growth and inflation, the Fed will not need to raise rates precipitously even though the unemployment rate is near what most Fed officials consider to be close to full employment. The Federal Reserve (Fed) Bank of Atlanta cut its forecasts for third quarter (Q3) gross domestic product (GDP) growth in the US, after the release of weak personal spending data. Specifically, the Atlanta Fed cut its US Q3 GDP growth estimate to 2.4%, from the prior forecast of 2.8% published on September 28.
On the economy front, consumers spending were barely changed in August as lower sales of new cars and trucks offset an increase in services such as education and health care. The flat reading last month - the weakest since March - fell short of expectations. Consumer spending soared 4.3% in the spring, but economists had expected it would taper off a bit in the third quarter to more normal levels. Americans are still spending fast enough to keep the economy churning forward, however. Incomes, meanwhile, grew more slowly last month. Personal income rose 0.2% in August, the smallest increase in seven months. Inflation as measured by the PCE index rose 0.1% in August. The PCE index, the Federal Reserve's preferred inflation barometer, increased 1% in the 12 months ended in August. That's up from 0.8% in July. The annual rate of core inflation edged up to 1.7%.
Meanwhile, the final reading of the University of Michigan's consumer sentiment index showed a rise in September to a level of 91.2, up from 89.8 in August. The gains were due to improving sentiment among households making $75,000 per year or more. The University of Michigan said there's no evidence of an improving trend, as the average since the start of the year, 91.4, is basically at September's level. The MNI Chicago Business Barometer, also known as Chicago PMI, increased 2.7 points to 54.2 in September from 51.5 in August, recovering most of lost ground experienced in the previous month. The gains were led by an improvement in production, which shot up 7.3 points to the highest level since January.
The Dow Jones Industrial Average added 164.70 points or 0.91 percent to 18,308.15, Nasdaq gained 42.85 points or 0.81 percent to 5,312.00, while S&P 500 was up 17.14 points or 0.80 percent to 2,168.27.
The Indian ADRs closed mostly in green; Tata Motors was up 0.66%, HDFC Bank was up 0.66% and Dr. Reddy's Lab was up 0.18%. On the other hand, Infosys was down 0.09% and Wipro was down 0.07%.