Sunday, September 09, 2007

US Markets Fall

Source: Financial Times

Global and U.S. stock and money markets fell dramatically on Friday upon the release of the U.S. job report. The first monthly fall in employment in four years led to fears of a U.S. economic slowdown. The fears increased when Countrywide, a major U.S. home lender, announced plans to cut up to 12,000 jobs. Other job data showed that employers cut 4,000 jobs, contrary to Wall Street Journal predictions that 110,000 jobs would be created. Along with the job losses, the government acknowledged that 81,000 fewer jobs were created in June and July than previously expected.

On Friday, the Down Jones fell 1.9%, S&P 500 fell 1.7%, FTSE 100 (London) fell 1.9%, and the FTSE Eurofirst 300 (Europe) fell 2.2%. The US Dollar also fell, relative to the Euro, nearing its record low.

After the job report, it is widely believed that the Federal Reserve will respond with cuts in interest rates. On September 18th, the Federal Reserve make its official announcement, but it appears that a cut in interest rates is inevitable. Policymakers are trying to guard against the effects from the housing downturn. Ben Bernanke, the Fed chairman, will ultimately make the final decision on federal interest rates.

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