Sun, Jul 08, 2012 - Page 15 News List

Wall Street faces growth fears

ANEMIC GROWTH:Job creation fell far short of the figures needed to reduce the 8.2 percent US unemployment rate, with global economic concerns the main culprit


US stock markets looked set for a rough ride next week after Friday’s disappointing jobs report underpinned fears that the economy’s already tepid growth is slowing.

The much-awaited labor data for last month showed dull job generation for the third consecutive month — at 80,000 jobs, far below what is needed to reduce the 8.2 percent unemployment rate.

Stocks fell sharply as the weak hiring raised alarms the struggling three-year-old recovery from deep recession is petering out under pressure from Europe’s debt crisis.

Adding to the uncertainty for employers was the November presidential election and the automatic spending cuts and tax hikes that kick in at the end of year, analysts said.

“Continuing concern over slow growth in the global economy was the likely culprit for the weak jobs number in June,” Paul Ausick at 24/ said. “The worse news is that those concerns are only likely to get worse in the second half of the year as the US approaches both the presidential election and the fiscal cliff looming at the end of the year.”

The markets pared heavy losses in late trade, wrapping up a week shortened by Wednesday’s public holiday.

The Dow Jones Industrial Average finished at 12,772.47 points, down 0.84 percent from a week ago.

The S&P 500 index, a broad measure of the markets, fell 0.55 percent over the week to 1,354.68.

The tech-rich NASDAQ closed the week in positive territory, with a small gain of 0.08 percent at 2,937.33.

A warning on slowing global growth from IMF Managing Director Christine Lagarde also hit sentiment on Friday. Lagarde said the IMF would cut its growth forecast in its global outlook to be released later this month.

The week’s economic calendar got off to a gloomy start after the Institute for Supply Management (ISM) reported US manufacturing fell for the first time in three years last month.

Later in the week, the ISM reported growth in the massive services sector slowed last month.

Tomorrow brings the unofficial beginning of second-quarter earnings season, with aluminum giant Alcoa reporting results after the markets close.

The economic calendar will lighten up. International trade will be in focus on Wednesday, as well as the minutes of the US Federal Reserve’s last meeting of its policy-setting Federal Open Market Committee (FOMC).

“The May trade data will help set expectations for Q2 growth, while the minutes of the June FOMC meeting will likely garner the most attention,” Nomura analysts said.

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