U.S. stocks rose this week as encouraging earnings reports and improved employment data buoyed investor sentiment. Gold, oil, and silver also moved higher. U.S. Treasuries rose as concerns increased that Ireland might have to seek external assistance from the International Monetary Fund as it grapples with its budget deficit.
Recent economic instability has been a trigger for gold buying. Gold prices rose to a record high of $1,274.75 per ounce this week amid talk that central banks will be net buyers of bullion this year for the first time in two decades and as worries increased that the U.S. Federal Reserve Board will have to do more to prop up the U.S. economy.
U.S. economic news
Consumer and producer prices show tame inflation
U.S. consumer prices rose in August for the second consecutive month as gas and food prices rose. Underlying inflation, however, was flat. The seasonally adjusted Consumer Price Index rose 0.3% from July. The underlying inflation rate, which is most closely watched by the U.S. Federal Reserve Board, was unchanged. Core consumer prices, which strip out volatile energy and food prices, posted the smallest gain in the past three months. Meanwhile, producer prices climbed 0.4% in August, putting them 3.1% above their level one year ago. Again, much of the gain was the result of the jump in energy prices.
Factory production cools
U.S. factory production cooled in August with industrial production rising 0.2% after a 6% gain in July. The data point to a slower pace of growth. Capacity utilization, which measures the percentage manufacturers' plants and facilities that are use, increased to 74.7% last month from 74.6% in July. The gauge averaged 80% over the past 20 years. The lower number indicates that there is now enough spare plant equipment and space available to prevent the bottlenecks and higher prices that could occur if demand rises.
Unemployment applications fall
Applications for U.S. unemployment benefits unexpectedly fell last week to the lowest level in two months, a sign the labor market is improving. Initial jobless claims dropped by 3,000 to 450,000 in the week ended September 11.
U.S. and global corporate news
Oracle reported that its quarterly profit jumped 20%, aided by demand for business software and the addition of hardware sales from Sun Microsystems, which Oracle acquired earlier this year.
China's Anshan Iron and Steel Group said it will buy 14% of Steel Development, a Mississippi-based steelmaker, and jointly invest in up to five mills. The deal has sparked strong lawmaker opposition in the United States over worries that technology will flow to China and jobs will be lost. Initially Anshan planned to build a $168 million plant in Amory, Mississippi, where the U.S. plant is headquartered.
While FedEx said its fiscal first-quarter profit more than doubled, its earnings forecast for the current quarter fell short of analysts' estimates. The company raised its full-year earnings forecast and said it will eliminate 1,700 jobs.
Global economic news
Japan intervenes to support yen
Japan sold the yen against the dollar this week for the first time since 2004 in an effort to prevent the yen's gains from undermining the exports propelling Japan's growth. The unilateral move came after the yen fell below 85 per dollar for the first time in almost two weeks. The currency has rallied as concerns about the durability of the U.S. recovery and the effect of Europe's debt woes.
Australian consumer confidence falls
Australian consumer confidence fell in September for the first time in three months as households grew more concerned about the economic outlook.
India raises interest rates to contain inflation
The Reserve Bank of India increased interest rates for the fifth time this year and said its actions have brought the monetary situation close to normal. The repurchase rate was boosted to 6% from 5.75%, and the reverse repurchase rate a half point to 5%.
Eurozone exports fall
European exports fell in July for the first time in three months in July as a global slowdown started to curb orders for companies across the euro region. In July exports dropped 0.6% from June, when they rose 5.3%. Imports fell 1.5%. The trade surplus jumped to 6.8 billion from 2.3 billion in June.
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