US Markets Move Higher On Rise In Industrial Output (18-Jul-2012)
The US markets edged higher on Tuesday, after consumer prices remained unchanged but industrial output rose in June. The market drifted lower immediately after the Fed Chairman speech but climbed back to positive territory in the afternoon. Testifying before the Senate Banking Committee, Bernanke reiterated that the central bank was prepared to make further moves to bolster the recovery, if warranted. Federal Reserve Chairman Ben Bernanke sketched out for members of Congress the weaker economic outlook and stressed that the central bank was prepared to take further action to try to give the recovery a jolt. In testimony to the Senate Banking Committee as part of his twice-yearly report on monetary-policy issues, Bernanke stated that the reduction in the unemployment rate will likely be frustratingly slow. Bernanke repeated that the US economy will continue to expand at a moderate pace in coming quarters and planned cuts in federal spending at the end of the year could push the economy back into recession.
Besides, the US consumer prices were unchanged in June, according to a report released by the US Labor Department. The Labor Department stated that consumer price index came in flat in June following a 0.3% drop in May. Energy prices declined 1.4% in June after slumping 4.3% in May and food prices gained 0.2% in June after coming in unchanged in May. Also, industrial production in the US increased more than anticipated in June, according to a report released by the Federal Reserve. The Fed stated industrial production climbed 0.4% in June following a revised 0.2% decrease in May with manufacturing output rising 0.7% in June after declining 0.7% in May. The industrial production increase was led by a rebound in the manufacturing sector.
In Europe, the International Monetary Fund approved the disbursement of €1.48 billion to Portugal after completing its fourth review of the country's performance under an economic program supported by an extended fund facility arrangement, bringing total disbursements to €21.13 billion. Also, policymakers at the Swedish central bank noted that the unease in Europe is casting a shadow over the Swedish economy. The Spanish Treasury sold €3.56 billion of 12- and 18-month bills at lower borrowing costs in the first debt auction after the announcement of the austerity measures last week. On the other hand, Moody's Investors Service downgraded by one to two notches the long-term debt and deposit ratings for ten Italian banks and the issuer ratings for three Italian financial institutions, prompted by the weakening of the Italian government's credit profile. The banks and financial institutions affected by the ratings cut have a negative outlook, which may increase the likelihood of future downgrades.
The Dow Jones industrial average rose by 78.333 points, or 0.62 percent, to 12,805.50. The S&P 500 Index gained 10.03 points, or 0.74 percent, to 1,363.67, while the Nasdaq Composite was up 13.10 points, or 0.45 percent, to 2,910.04.
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