U.S. economic news for the week ended December 16, 2011

Stocks declined this week as ongoing concerns about the eurozone debt crisis forced investors to the sidelines. The cost of insuring against a default on European sovereign debt approached record levels amid the ongoing search for an exit strategy that is acceptable to all. Investor disappointment that the U.S. Federal Reserve Board refrained from taking new action to bolster U.S. growth further pressured markets.

U.S. and global economic news

Euro drops to lowest level in nearly a year
The euro dropped to its lowest level against the dollar in nearly a year amid concerns about the eurozone economy. Doubts about efforts to contain the debt crisis continued to unsettle investors this week as the region's leaders debated solutions to the financial woes. Rates that banks charge each other for short-term borrowing in dollars hit their highest level since July 2009, and yields on Italian bonds jumped above 7%, a level that makes it difficult for Italy to borrow.

Fed maintains easy monetary policy
The Fed this week reaffirmed its belief that current economic conditions will likely warrant exceptionally low interest rates through at least mid-2013. This week's stable inflation numbers gave the central bank further leeway to keep a lid on rates. U.S. consumer prices were unchanged in November as a drop in energy costs offset a slight rise in food prices. Other news showed some year-end strengthening of the economy. Jobless claims fell unexpectedly last week to their lowest level in three years, and manufacturing in the New York region expanded in December to the highest level in seven months.

Indonesia regains investment-grade rating
After 14 years, Indonesia regained an investment-grade rating for its sovereign debt from Fitch Ratings. The country, Southeast Asia's largest economy, had its long-term foreign and local currency debt raised to BBB- from BB+. It had lost its investment-grade rating in December 1997 during the Asian financial crisis. Fitch said that the upgrade reflects the country's strong and resilient economic growth, low and declining public debt ratios, strengthened external liquidity, and prudent overall macro policy framework.

U.S. and global corporate news

Two European banks take emergency measures to address deepening crisis
Crédit Agricole, France's third largest bank, said it will exit 21 of 53 countries in which it operates in an effort to shore up its finances. It also announced that it will sell its private equity business to investment fund Coller Capital as part of its plan to boost capital ratios. Commerzbank, Germany's second largest bank by assets, is in negotiations to transfer suspect assets to a government-owned "bad bank." Transferring its bad assets to this government bank will allow Commerzbank to shore up its balance sheets, while avoiding the appearance of a taxpayer bailout.

RIM's stock falls to seven-year lows
Blackberry maker Research in Motion's stock fell to a seven-year low after it announced its fiscal third-quarter earnings fell 71% on charges related to the troubled launch of a tablet competitor to Apple's iPad. The company further disappointed investors with news that its long-awaited product revamp will be delayed until later in 2012.

Zynga raises $1 billion in IPO
Zynga, the largest maker of games for Facebook, raised $1 billion in its initial public offering of 100 million shares of common stock at $10 per share. The offering is the biggest by a U.S. Internet company since Google raised $1.9 billion in its 2004 IPO. The stock will trade under the symbol ZNGA.

Morgan Stanley to cut 1,600 jobs
Morgan Stanley announced plans to cut 1,600 jobs, or 2.6% of its workforce. The layoffs come as Wall Street profits are hit by volatile markets and customer hesitancy toward investing. The cuts are the largest for the company since late 2008 and early 2009, when it laid off more than 2,500 workers in the midst of the financial crisis.