While you were sleeping: Eyes on Bernanke
August 29 (BusinessDesk) – Wall Street was mixed as investors by and large chose to remain on the sidelines in
anticipation of Federal Reserve Chairman Ben Bernanke's address to a conference of central bankers in Jackson Hole,
Wyoming at the end of the week.
Economic indicators pointed to further weakness as confidence of the all-important American consumer dropped more than
expected. The Conference Board’s index slid to 60.6 from a revised 65.4 in July, the biggest drop since October. The
reading was less than the most-pessimistic forecast in a Bloomberg News survey in which the median projection was 66.
Still, the real estate market provided some good news as a separate report showed home prices in 20 American cities rose
in the 12 months ended in June, the first year-over-year increase in nearly two years. The S/Case-Shiller index of property values increased 0.5 percent from a year earlier.
In late afternoon trading in New York, the Standard & Poor's 500 Index eked out a 0.10 percent gain while the Nasdaq Composite Index rose 0.20 percent. The Dow Jones
Industrial Average slid 0.05 percent.
"A mixed bag of economic indicators that sort of point downward; we are all hopeful this leaves some room for the Fed to
shower money on us," Jack Ablin, chief investment officer, Harris Private Bank in Chicago, told Reuters. "Unfortunately
a fair amount of stimulus is probably priced in, so we are at a period now where bad news is good news until we hear
what [Bernanke] is actually going to do."
Companies addressing the economic uncertainty with cost cuts tend to be applauded for their moves. So it was for Lexmark
International, which said it will cut 1,700 jobs and stop making inkjet printers. The stock was last up 17 percent.
In Europe, the Stoxx 600 Index finished the session with 0.7 percent slide from the previous close. Benchmark indexes in
Germany, France and the UK all ended lower.
The skies are darkening in Spain, as the debt-laden country sank further into recession in the second quarter. That
re-fuelled expectations it will be the next euro-zone country that will have to ask for full-blown international
financial assistance, following in the footsteps of Ireland, Greece and Portugal.
Spain has already secured as much as 100 billion euros of support for its banks, now crumbling further under an
increasing amount of withdrawals by concerned private and corporate customers.
Martin van Vliet, an economist at ING, told Reuters he expects Spain to formally request additional external financing
in mid-September or October.
Over in Japan, the government lowered its assessment for the economy, citing easing of growth in the US and China as
well as Europe's troubles.
“Europe’s debt crisis is having the effect of a body blow to Japan’s economy,” Yoshimasa Maruyama, chief economist at
Itochu in Tokyo, told Bloomberg.
“Concerns over Japan’s economic outlook will probably build pressure on the [Bank of Japan] to apply more monetary
stimulus,” according to Maruyama, who said the central bank could move in October.
(BusinessDesk)