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US stocks rise after mixed economic news
Source: Agencies |
August 13, 2011, Saturday
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Online Edition
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THE mixed economic signals driving the stock market's record-setting swings this week keep coming. Yesterday, conflicting reports on retail sales and consumer sentiment sent the Dow up, then down, then up again.
By early afternoon, the Dow Jones industrial average was up 162 points. It had been up more than 150 points early yesterday after a government report consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But the Dow briefly turned negative after a dismal survey on consumers' feelings about their personal finances and the economy.
The Reuters/University of Michgan survey of consumer sentiment fell to a 30-year low.
The retail sales data covered all of July, but financial markets didn't start their wild ride until July 22. The sentiment survey was taken over the past 10 days, as Americans watched the markets leap and dive on news about Europe's spreading financial crisis, the first-ever downgrade of the USs long-term credit rating, signals that the job market improved slightly in July and strong earnings from a technology bellwether.
Normally, such a bad consumer survey would have pushed shares sharply lower for the day, said Quincy Krosby, an investment strategist with Prudential Financial.
"But these are not normal times," she said. Market volatility cuts both ways, sending shares way up or way down, Krosby noted. That can cause shares to defy economic data.
A separate government report yesterday showed that businesses increased their stockpiles of everything from raw materials to retail products for the 18th month in a row. Growing inventories are usually a sign of business confidence. But nervous consumers have held back recently; in June they cut their spending for the first time in nearly two years.
Markets worldwide gained yesterday despite a trade report on Thursday that showed the economic slowdown might be a global phenomenon. France reported yesterday that economic growth in the country slowed sharply in the second quarter.
In early afternoon trading, the Dow rose 162 points, or 1.5 percent, to 11,306. The Standard & Poor's 500 index added 12, or 1 percent, to 1,185. The Nasdaq composite index gained 22, or .9 percent, to 2,515.
If shares close higher, it will be the first time in more than a month that the market has risen two days in a row. The Dow and the S&P last rose for two trading days on July 6 and 7.
A bath of bad economic news had pummeled markets since before they started their long slide three weeks ago. At Thursday's close, the Dow had fallen more than 12 percent since that date.
The strong retail sales added to a recent trend of more positive data about the economy. The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment. On Thursday, the government said that applications for unemployment benefits had fallen to a four-month low. But some analysts believe recently announced layoffs will cause that number to rise in the coming weeks.
If the market's gyrations spook consumers, fears that the economy might tip back into recession could become self-fulfilling, analysts said. People might cut back on spending just as retailers stock up for the crucial holiday season. Businesses would slash new orders, and demand for manufacturers' goods would dip.
Investors are already dizzy from seesaw trading. Shares have swung by hundreds of points each day this week as traders react to news about the economy, Federal Reserve policy and a financial crisis in Europe that could threaten US banks.
High-speed trading by computers has contributed to the volatility, as shares hit high and low levels at which machines are programmed to buy or sell large numbers of shares.
Markets in Europe advanced yesterday and bank stocks recovered some of this week's losses. Regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators. Asian markets closed mixed.
Concerns about the French economy stoked fears about the crisis in the eurozone, where France has the second-largest economy after Germany's. As their heavily indebted neighbors struggle to stay afloat financially, the region's economic powers are shouldering most of the costs of rescuing Greece, Portugal and Ireland from defaulting on their debts. A default would increase borrowing costs and hurt the regional currency.
By early afternoon, the Dow Jones industrial average was up 162 points. It had been up more than 150 points early yesterday after a government report consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But the Dow briefly turned negative after a dismal survey on consumers' feelings about their personal finances and the economy.
The Reuters/University of Michgan survey of consumer sentiment fell to a 30-year low.
The retail sales data covered all of July, but financial markets didn't start their wild ride until July 22. The sentiment survey was taken over the past 10 days, as Americans watched the markets leap and dive on news about Europe's spreading financial crisis, the first-ever downgrade of the USs long-term credit rating, signals that the job market improved slightly in July and strong earnings from a technology bellwether.
Normally, such a bad consumer survey would have pushed shares sharply lower for the day, said Quincy Krosby, an investment strategist with Prudential Financial.
"But these are not normal times," she said. Market volatility cuts both ways, sending shares way up or way down, Krosby noted. That can cause shares to defy economic data.
A separate government report yesterday showed that businesses increased their stockpiles of everything from raw materials to retail products for the 18th month in a row. Growing inventories are usually a sign of business confidence. But nervous consumers have held back recently; in June they cut their spending for the first time in nearly two years.
Markets worldwide gained yesterday despite a trade report on Thursday that showed the economic slowdown might be a global phenomenon. France reported yesterday that economic growth in the country slowed sharply in the second quarter.
In early afternoon trading, the Dow rose 162 points, or 1.5 percent, to 11,306. The Standard & Poor's 500 index added 12, or 1 percent, to 1,185. The Nasdaq composite index gained 22, or .9 percent, to 2,515.
If shares close higher, it will be the first time in more than a month that the market has risen two days in a row. The Dow and the S&P last rose for two trading days on July 6 and 7.
A bath of bad economic news had pummeled markets since before they started their long slide three weeks ago. At Thursday's close, the Dow had fallen more than 12 percent since that date.
The strong retail sales added to a recent trend of more positive data about the economy. The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment. On Thursday, the government said that applications for unemployment benefits had fallen to a four-month low. But some analysts believe recently announced layoffs will cause that number to rise in the coming weeks.
If the market's gyrations spook consumers, fears that the economy might tip back into recession could become self-fulfilling, analysts said. People might cut back on spending just as retailers stock up for the crucial holiday season. Businesses would slash new orders, and demand for manufacturers' goods would dip.
Investors are already dizzy from seesaw trading. Shares have swung by hundreds of points each day this week as traders react to news about the economy, Federal Reserve policy and a financial crisis in Europe that could threaten US banks.
High-speed trading by computers has contributed to the volatility, as shares hit high and low levels at which machines are programmed to buy or sell large numbers of shares.
Markets in Europe advanced yesterday and bank stocks recovered some of this week's losses. Regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators. Asian markets closed mixed.
Concerns about the French economy stoked fears about the crisis in the eurozone, where France has the second-largest economy after Germany's. As their heavily indebted neighbors struggle to stay afloat financially, the region's economic powers are shouldering most of the costs of rescuing Greece, Portugal and Ireland from defaulting on their debts. A default would increase borrowing costs and hurt the regional currency.
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