US stocks slipped on Wednesday as a five-month rally that pushed the market to a new 2 1/2-year high started to shows signs of fatigue. Federal Reserve Chairman Ben Bernanke told a congressional committee that the labour market remains sluggish and he continues to believe that inflation will remain subdued. Wall Street's reaction to Bernanke's comments was muted.
Thursday, February 10, 2011
McDonald's lifts Dow for seventh day; volume light
The Dow notched a seventh straight day of gains on Tuesday, but light volume suggested that investors don't believe the more than five-month rally has the legs to keep going. Surprisingly strong sales by McDonald's boosted optimism on consumer spending and drove the Dow's gains on what turned out to be the quietest day of trading so far in 2011, with total volume about 17 percent below last year's daily average.
Nikkei average declines
Japan's Nikkei stock average edged lower to come off a nine-month high on Wednesday, as profit-taking in bank shares erased earlier gains made on upbeat earnings guidance from Toyota Motor Corp. Weakness in Shanghai shares after a rate hike from China, its second move in six weeks to rein in surging inflation, helped dampen sentiment while investors also grew cautious before the settlement of Nikkei 225 February options on Thursday.
UK's top share index slides
Britain's top share index closed down on Wednesday, hurt by heavyweight stocks trading ex-dividend and miners following metals prices lower. The FTSE 100 closed down 39.04 points, or 0.6 percent, at 6,052.29, having closed up 0.7 percent on Tuesday at its best level since May 2008.
European shares fall
European shares fell on Wednesday, retreating further from 29-month highs hit earlier this week, weighed down by miners on concerns over demand from China, though positive corporate results offered some support. Several heavyweight UK stocks, including BP, Shell and GlaxoSmithKline, traded ex-dividend, partly leading the UK FTSE 100 to fall 0.6 percent and underperform German DAX and French CAC 40.
Republicans grill Bernanke over inflation threat
Members of Congress sharply questioned Federal Reserve Chairman Ben Bernanke Wednesday over whether the Fed's policies are raising the risk of rising inflation in the months ahead. House Budget Committee Chairman Paul Ryan, a Republican, said he is concerned that the Fed won't be able to detect inflation until "the cow is out of the barn" and inflation is already spreading dangerously through the US economy.
US job growth, inflation still too low, says Bernanke
US unemployment remains too high for policymakers' comfort despite signs of strength in the economic recovery, Federal Reserve Chairman Ben Bernanke said on Wednesday. In testimony to the US House of Representatives' Budget Committee that largely echoed a speech he delivered last week, Bernanke also warned about the dangers of unsustainable budget deficits.
Cooperation in Congress will aid economy: Geithner
US Treasury Secretary Timothy Geithner on Wednesday strongly pitched increased bipartisan co-operation among lawmakers as vital for building business and market confidence in the economy's growth. Days ahead of a new budget that the Obama administration hopes will mollify some Republican anger over spending, Geithner told a forum sponsored by The Atlantic magazine that Congress needs to pull together to build confidence.
UK goods trade deficit hits record high
Britain's goods trade deficit unexpectedly hit a record high in December, underscoring doubts about UK competitiveness, though the figures were worsened by bad weather and a tax-related jump in aircraft imports. The data chime with a sharp fall in UK GDP at the end of 2010 and deal a further blow to hopes that exporters will be able to drive growth in 2011 when both the government and consumers are tightening their belts.
US job openings dip
US job openings slipped in December, a government report showed on Tuesday, but a decline in layoffs supported views of a gradual labour market recovery. Job openings, a measure of labour demand, eased 139,000 to a seasonally adjusted 3.1 million, the Labour Department said in its monthly Job Openings and Labour Turnover Survey.
Coca-Cola sales beat estimates
Coca-Cola Co reported higher-than-expected quarterly sales, as it gained market share and also saw growth in each of its major markets for the first time in years. Shares of the world's largest soft-drink maker rose 1.5 percent. The results on Wednesday are Coke's first to include its North American bottling operations, and improvement in the company's home region was a sign of success for that acquisition.
McDonald's rebounds in Europe
McDonald's Corp posted stronger-than-expected global sales at established restaurants as demand in Europe rebounded, coming in far above Wall Street estimates. The results sent McDonald's shares up more than 3 percent in morning trading. "Europe was the concern, and Europe blew it through," Oppenheimer analyst Matt DiFrisco said. "That will give people a little bit of increased confidence."
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