Sun, Sep 05, 2010 page10

• Wall Street ends week with hope

  ‘WEEK OF RELIEF’ While US unemployment edged up to 9.6%, the private sector created 67,000 new jobs, which together with manufacturing data bolstered optimism

  • AFP, NEW YORK
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  Wall Street heads into next week with a strong tailwind from recent days’ rally and a brighter outlook as traders keenly await US President Barack Obama’s unveiling of new plans for boosting the shaky US economy.

  Last week’s slew of economic data, led by a better-than-expected employment report and strong manufacturing numbers, increased optimism that the US economy was on a recovery track, albeit at a slower pace than hoped for.

  Traders breathed a sigh of relief on Friday after highly anticipated Labor Department figures said the US economy lost 54,000 jobs last month, much less than most analysts’ expectations.

  While the unemployment rate rose to 9.6 percent, the private sector created 67,000 new jobs, which together with Wednesday’s manufacturing data bolstered a modestly optimistic economic outlook.

  “For weeks we had only seen bad news and began developing extremely bleak scenarios of ­deflation and a second-dip recession, so this was a week of relief,” said Evariste Lefeuvre, an analyst at Natixis North America.

  With traders returning from Labor Day holiday on Tuesday to a four-day trade week, markets were likely to be choppy as investors continue to take in the passing week’s data.

  This week is to see the release of weekly jobs claims and the trade deficit report, which will offer further indications on the health of the economy.

  “The market may recalibrate and recoil at the beginning of next week ... trade volumes will go up as people come back from Labor Day,” Prestige Economic president Jason Schenker said.

  Most of the attention is likely to turn to Obama, whose week will be focused on the economy as he travels to the hard-hit Midwest and gives a major White House press conference on Friday.

  “We are entering a period where we will have to closely follow politics,” Lefeuvre said.

  On Friday, Obama said that the new jobs data “reflects the steps we have already taken to break the back of this recession ... But it is not nearly good enough.”

  The still-high headline unemployment rate and slow hiring presented a major hurdle for the White House as it struggles to prop up the jobs market, one of Obama’s biggest concerns ahead of the November elections.

  “The question is what Obama is going to do in the form of tax cuts and spending increases, so obviously that will be of great interest,” said independent analyst Hugh Johnson. “The economy based on employment numbers is just limping along and needs help or resuscitation.”

  Obama’s economic team is considering a raft of new measures to inject impetus into the economy, which one report said could include tax breaks for businesses that could potentially reach hundreds of billions of dollars.

  The White House, however, ruled out an “extraordinary” economic stimulus plan to fire up the recovery — along the lines of the Recovery Act passed last year, which a recent estimate put at US$814 billion.

  Obama’s chief spokesman, Robert Gibbs, said on Thursday that a “big, new stimulus plan is not in the offing.”

  The sluggish recovery is bound up with slower-than-hoped for jobs growth and has helped to depress Obama’s public approval ratings into the mid-40s, a factor weighing heavily on his party as the election nears.

  For the week, the Dow Jones Industrial Average was up 2.93 percent to 10,447.93 and the broader S&P 500 index soared 3.75 percent to 1,104.51. The technology-rich NASDAQ composite index jumped 3.72 percent to 2,233.75.
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