8.03.2011

US shares fall as spending data ignites economic fears


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 54384821 useconomy US shares fall as spending data ignites economic fears The spending figures follow the release other grim data on the US economy

US stocks have fallen sharply amid renewed fears for the pace of recovery in the world's biggest economy.

Wall Street's three leading indexes each ended more than 2% down as another set of grim economic figures saw investors push gold to a fresh high.

Official data showed that US consumers cut spending in June, while incomes grew at their smallest rate this year.

A deal in Washington, meanwhile, to avert a disastrous debt default failed to impress credit ratings agencies.

On Wall Street the Dow Jones index closed down 2.2% to 11,867, while the tech-rich Nasdaq fell 2.8% to 2,669.

Downgrade?

The broader Standard & Poor's 500 index fell 2.6% to 1,254, its lowest point of the year.

Gold reached another high of $1,640.39 an ounce as investors looked for a safe haven. There was also demand for the Swiss franc.

The fall in stocks came despite a long-awaited deal between the White House and Congress to increase the nation's debt ceiling.

Ratings agencies Moody's and Standard and Poor's were both cautious about the agreement.

Moody's upheld the US's prized AAA credit rating, but the agency added a "negative outlook" on the rating, saying a historic downgrade could still come if US economic growth deteriorated significantly.

Standard and Poor's managing director Moritz Kraemer told the BBC that "the probability of a downgrade should not be discarded".

He said the firm needed to "analyse the deal in detail rather than just looking at the headline figures".

News of the debt deal arrived with investors already nervous about fresh signs of America's economic fragility.

Stalled

Earlier, the US Department of Commerce said that consumer spending fell 0.2% in June for the first time in almost two years.

Meanwhile, incomes rose 0.1% in June, the smallest rate of growth for nine months.

The US economy added just 18,000 net jobs in June, the smallest rise in nine months. Meanwhile, unemployment in June rose to 9.2%, the highest rate so far this year.

"If the recovery is ever going to gain speed, it will have to come from households deciding they want to spend money again," said Joel Naroff, chief economist at Naroff Economic Advisors.

Many economists have begun scaling back third-quarter growth estimates to around 2.5% from 3%.

The figures followed a report last week showing that the US economy grew at a modest annual rate of 1.3% in the second quarter of the year.

On Monday a survey on US factory activity suggested manufacturing stalled in July. The gloomy findings followed similarly weak economic reports from Asia and Europe.

There were also steep falls on Tuesday in share prices on the Spanish and Italian stock markets as eurozone debt fears resurfaced.

source: bbcuk

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dewa 03 Aug, 2011


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Source: http://arsipberita.com/show/us-shares-fall-as-spending-data-ignites-economic-fears-281648.html
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