Saturday, 9 November 2013

Dow hits record after US employment beats forecasts, France's credit rating cut

After falling on Thursday, US stocks bounced back strongly on Friday. The S&P 500 rose 1.3 percent, erasing the previous day's losses. The Dow Jones Industrial Average rose 1.1 percent to a record high of 15,761.78.

Stocks rose despite the 10-year Treasury yield jumping 15 basis points to 2.75 percent after a surprisingly strong US employment report on Friday.

The Labor Department reported that the US economy added 204,000 jobs in October, more than the most optimistic forecast from economists as well as the 163,000 increase in September. The unemployment rate, though, rose to 7.3 percent from 7.2 percent.

The improvement in the employment picture is especially welcome news after another report on Friday showed that US consumer spending has slowed. The Commerce Department reported that consumer spending rose 0.2 percent in September after having risen 0.3 percent in August. Income, though, increased 0.5 percent in September, the same as in August.

Consumer spending could remain weak after another report on Friday showed that the preliminary reading of the Thomson Reuters/University of Michigan consumer sentiment index for November came in at 72.0, down from 73.2 in October and the lowest since December 2011.

Meanwhile, elsewhere in the world, a report earlier on Friday showed that China's exports rose 5.6 percent in October from the previous year. Exports had fallen 0.3 percent in September. Imports rose 7.6 percent in October from the previous year.

In other trade-related news on Friday, Germany's trade surplus widened in September after exports rose 1.7 percent while imports fell 1.9 percent but Britain's trade deficit widened in September after exports fell 4.6 percent over the three months to September while imports rose 1.3 percent.

France was hit by multiple negative news on Friday. Its trade deficit widened in September while industrial production fell 0.5 percent.

To top it off, its credit rating was cut to AA from AA+ by Standard & Poor’s.

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