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06-Feb2019

US markets end higher on Tuesday

The US markets ended higher on Tuesday as investors continued to sort through corporate earnings. The continued strength on markets was partly attributed to reports of a meeting between Federal Reserve Chairman Jerome Powell and President Donald Trump on Monday, which eased concerns about relations between the central bank chief and the president. A statement from the Fed said Powell and Trump had an informal dinner to discuss recent economic developments and the outlook for growth, employment and inflation. Fed Vice Chairman Richard Clarida and Treasury Secretary Steven Mnuchin also attended the meeting, which came after months of Trump criticizing the central bank for raising interest rates. The Fed said Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook. Powell also told Trump the Fed's interest rate decisions will based solely on careful, objective and non-political analysis. Meanwhile, investors were awaiting Trump's State of the Union speech. Trump is set to deliver his State of the Union address at 9 pm Eastern time Tuesday.

On the economic front, activity in the US service sector grew at a slower rate in the month of January, according to a report released by the Institute for Supply Management (ISM). The ISM said its non-manufacturing index fell to 56.7 in January from an upwardly revised 58.0 in December, although a reading above 50 still indicates growth in the service sector. Street had expected the non-manufacturing index to dip to 57.1 from the 57.6 originally reported for the previous month. With the bigger than expected decrease, the index dropped to its lowest level since a matching reading in July of last year. New order growth showed a significant slowdown compared to the previous month, with the new orders index slumping to 57.7 in January from 62.7 in December. The business activity index also fell to 59.7 in January from 61.2 in December, while the employment index rose to 57.8 from 56.6.

Dow Jones Industrial Average surged 172.15 points or 0.68 percent to 25411.52, S&P 500 gained 12.83 points or 0.47 percent to 2737.70 and Nasdaq was up by 54.55 points or 0.74 percent to 7402.08.



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