Stocks ended a three-day rally as investors were disappointed by Germany's stagnant economy and the European Unions financial problems, raising concerns that the U.S.'s own prospects for recovery may be weaker as a result. German Chancellor Angela Merkel and French President Nicolas Sarkozy are proposing that all countries in the eurozone to have stronger governance over budgets and economic policy. Showing a public display of unity, the German and French leaders have pledged to defend the euro, and create a new government body consisting of the heads of state of all member nations. The U.S., meanwhile, did its part to pare early losses in the market. Fitch Ratings gave the U.S. a vote of confidence, standing by its AAA rating and stable outlook on the nation's debt. The Federal Reserve also announced that industrial production in July rose 0.9 percent, the largest increase this year. Major retailers also released a slew of good news, with discounters like Wal-Mart (WMT) and TJX Co. (TJX) posting strong earnings, and high-end chain Saks (SKS) narrowing losses on full-price sales. The trend is indicative of consumer spending habits during difficult economic times, as the gap between discount and luxury widens. Oil prices slumped to $86 a barrel, and gold looks to be approaching $1,800 an ounce once again.
Major U.S. Stock Indices
DJIA: 11,355.87 (-1.14 percent)
S&P 500: 1,187.42 (-1.46 percent)
NASDAQ: 2,508.90 (-1.81 percent)
Russell 2000: 699.86 (-2.61 percent)
In other news:
- What is a "death cross" and why are there so many of them appearing the market? These technical indicators may be signaling a new bear market. [Marketwatch]
- What exactly is Google (GOOG) getting with the $12.5 billion acquisition of Motorola Mobility (MMI) and why did they pay so much for it? [Economist]
- Lehman Bros. is tracking down former employees to pay back signing bonuses. [WSJ]
- Instead of slashing jobs during the current economic slowdown, perhaps the private sector should be using its cash to invest for future prosperity...Or at least out of a sense of patriotism. [NY Times]
- Is President Barack Obama too nice? [The Atlantic
Check back as more news develops.
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