The US markets closed higher on Thursday, as investors' sentiment, battered by political uncertainty surrounding President Donald Trump, stabilized on a positive reading on jobless claims. The number of Americans on unemployment fell mid-May to the lowest level since 1988, underscoring the strongest labor market in years. So-called continuing claims, or the number of people collecting jobless benefits, fell by 22,000 to 1.9 million in early May. That's the lowest level in 29 years. The US economy has been creating new jobs at a rapid clip for the past six years, knocking the unemployment rate below 5% and helping millions of Americans to recover from the worst recession in decades. Applications for unemployment benefits have registered less than 300,000 for 115 straight weeks, the longest run since the early 1970s. The more stable monthly average of jobless claims fell slightly to 240,750.
Separately, manufacturing in the Philadelphia region showed unexpected strength in May, a sign that the factory sector could be on solid ground. The Philadelphia Fed said its manufacturing index jumped to a reading of 38.8 in May from 22 in April. It marked the tenth month above zero on an index where any positive reading indicates improving conditions. The level of the index in May is just below the recent peak of 43.3 hit in February. The new-orders index dipped to 25.4 in May from 27.4 in April. On the other hand, the shipments index jumped to 39.1 from 23.4 in the prior month. The leading economic index rose 0.3% in April and pointed to faster growth in the spring after a weak first-quarter reading on gross domestic product. The increase in April follows a 0.5% gain in March. The recent trend in the US LEI, led by the positive outlook of consumers and financial markets, continues to point to a growing economy, perhaps even a cyclical pickup. A measure of current conditions rose 0.3%, as did a lagging index. The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.
Meanwhile, Cleveland Federal Reserve Bank President Loretta Mester repeated her call for further US-interest rate hikes now that the economy has reached full employment and inflation is nearing the Fed's 2-percent goal. Mester added that it's important for the FOMC to remain very vigilant against falling behind, especially given the low level of interest rates and the large size of our balance sheet. Mester said that while the Fed need not raise rates at every meeting, it should raise rates more than once this year. Mester enlightened that she is comfortable with the Fed beginning to trim its $4.5 trillion balance sheet this year, and that once the Fed has detailed its plan to reduce its holdings, it should stick to the plan and rely only on short-term rate policy to manage its response to changing economic conditions.
The Dow Jones Industrial Average gained 56.09 points or 0.27 percent to 20,663.02, Nasdaq added 43.89 points or 0.73 percent to 6,055.13, while S&P 500 edged higher by 8.69 points or 0.37 percent to 2,365.72.
The Indian ADRs closed mixed; Wipro was up 1.27%, Infosys was up 0.60% and HDFC Bank was up 0.44%. On the other hand, ICICI Bank was down 1.05% and Dr. Reddy's was down 1.03%.