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06-Dec2017

US markets closed lower on Tuesday

The US markets closed lower on Tuesday, driven by losses in utilities, telecoms and industrials sectors. An earlier rebound in the technology sector fizzled out, sending the Nasdaq Composite into negative territory, reversing solid gains in the morning. Republicans in US House of Representatives began staking out their positions on final tax legislation, days ahead of talks with the Senate to shape the tax package lawmakers hope to send to President Donald Trump by year end. Separately, Federal Reserve Governor Jerome Powell, facing a Senate committee vote on his nomination to become the central bank's chairman, won strong bipartisan support that suggests he'll sail through the full Senate.

On the economy front, the US trade deficit in October jumped 8.6% to a ninth-month high of $48.7 billion from $44.9 billion. Imports climbed 1.6% to a record $244.6 billion. Exports were unchanged at $195.9 billion. OPEC was a big winner. Nearly half of the increase in the US trade deficit was tied to larger imports of petroleum at higher prices. The average cost of a barrel of oil rose to a more than two-year high of $47.26. The sharp increase in the trade deficit might be the only thing to prevent the US economy from topping 3% for the third quarter in a row. If it doesn't recede in the next two months, fourth-quarter GDP could take a hit.

Meanwhile, the Institute for Supply Management's index of service-oriented companies such as banks and retailers fell to 57.4% in November from a 12-year high of 60.1% in October. Numbers over 50% are viewed as positive for the economy, however, and anything over 55% is considered exceptional. The new orders index fell 4.1 points to 58.7%, production slipped 2.7 points to 57% and employment declined 2.2 points to 55.3%. Inventories also fell. Still, 16 of the 17 industries tracked by ISM said their businesses were expanding in another show of strength for a US economy.

The Dow Jones Industrial Average lost 109.41 points or 0.45 percent to 24,180.64, the Nasdaq dropped 13.153 points or 0.19 percent to 6,762.21, and the S&P 500 edged lower by 9.87 points or 0.37 percent to 2,629.57. 


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