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US markets close higher on Fed rate cut decision

Thursday, November 1, 2007

US markets closed higher after initially plunging after the Fed decision was announced but soon recovered and rallied strongly. Encouraging economic news and a batch of reassuring earnings results ensured that the bulls were in charge on Wall Street. Third quarter GDP rose higher than estimates at 3.9%.

The Fed Funds rate now stands at 4.50%. Last month, the Fed surprised the market with a larger-than-expected half-point cut in the funds rate -- the rate banks charge each other for overnight loans. The Dow, which had dipped briefly into negative territory after the decision, rose 137.54, or 1%, to 13,930.01. Broader stock indicators also advanced. The Standard & Poor's 500 index rose 18.36, or 1.20%, to 1,549.38, and the Nasdaq composite index rose 42.41, or 1.51%, to 2,859.12. The Russell 2000 index of smaller companies rose 11.87, or 1.45%, to 828.02.

Treasury bond prices fell after the Fed's decision. The yield on the 10-year Treasury note, which moves inversely to its price, rose to 4.47% from 4.39% late Tuesday.

Indian ADRs end mixed; HDFC Bank up 6.5%, VSNL down more than 7%

Indian ADRs ended the day on a mixed note even as the US markets gained on the Fed's decision to cut interest rates. In the technology pack, Infosys Technologies was up 0.73% at $ 50.94, Patni Computers was down 5.84% at $ 21.11, Satyam Computers was up 2.85% at $ 30.35, while Wipro ended the day 3.52% higher at $ 16.47.

In the non-technology pack, HDFC Bank was up 6.55% at $ 139, VSNL was down 7.81% at $ 27.50, ICICI Bank was up 4.56% at $ 69.44, MTNL was down 2.65% at $ 9.20, Tata Motors was down 1.5% at $ 19.70, Dr Reddy's Lab was down 0.56% at $ 15.85 and Sterlite was up 4.09% at $ 25.97.

Posted by FR at 9:08 AM  


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