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23-Mar2019

US markets end lower on Friday

The US markets ended lower on Friday on account of profit booking after yesterday's strong upward move.  Lingering uncertainty about trade talks between the US and China weighed on the markets ahead of another round of high-level negotiations next week. Beside, traders also continued to digest the Federal Reserve's dovish monetary policy announcement earlier in the week. The Fed's decision to move away from plans to continue raising interest rates this year has been described by some participants as an effort to keep the stock markets afloat amid an expected contraction in first quarter earnings. The central bank has also been accused of bending to pressure from President Donald Trump, who has claimed US economic growth would be even stronger if the Fed had not raised rates last year. Adding to the concerns about the outlook for the economy, the yield on the benchmark ten-year note fell below the yield on the three-month bond, which is seen by many as a reliable harbinger of a recession.

On the economic front, Wholesale inventories in the US increased by much more than anticipated in the month of January, according to a report released by the Commerce Department. The report said wholesale inventories surged up by 1.2 percent in January after jumping by 1.1 percent in December. Street had expected inventories to rise by 0.2 percent. The bigger than expected increase in wholesale inventories was partly due to a 1.6 percent spike in inventories of non-durable goods, which followed a 0.1 percent uptick in December. Inventories of petroleum products shot up by 10.7 percent, leading the way higher along with a 3.2 percent jump in apparel inventories. The Commerce Department said inventories of durable goods also climbed by 0.9 percent in January after surging up by 1.7 percent in December. Meanwhile, after reporting existing home sales at their lowest level in over three years in the previous month, the National Association of Realtors (NAR) released a report showing a substantial rebound in existing home sales in the month of February. NAR said existing home sales soared by 11.8 percent to an annual rate of 5.51 million in February after slumping by 1.4 percent to a revised rate of 4.93 million in January. Street had expected existing home sales to surge up by 3.2 percent to a rate of 5.10 million from the 4.94 million originally reported for the previous month.

Dow Jones Industrial Average plunged 460.19 points or 1.77 percent to 25502.32, S&P 500 declined 54.17 points or 1.90 percent to 2800.71 and Nasdaq was down by 196.29 points or 2.50 percent to 7642.67.


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