Published June 08, 2012
FOX Business: The Power to Prosper
On the heels of posting the worst weekly performance of 2012, the markets zoomed higher this week on hopes policymakers may be willing to take action to buoy ailing world economies.
The Dow Jones Industrial Average rose 93 points, or 0.75%, to 12554, the S&P 500 rose 10.7 points, or 0.81%, to 1326 and the Nasdaq Composite jumped 27.4 points, or 0.97%, to 2858.
For the week, the Dow jumped 3.6%, the S&P 500 gained 3.7% and the Nasdaq rallied 4%.
With little in the way of economic data released this week, market participants have been focused on a stream of commentary from global central banks. However, much of the news has come as a disappointment. The European Central Bank and Bank of England both held off on making changes to their monetary policy, while commentary from Federal Reserve Chairman Ben Bernanke was interpreted as suggesting the central bank isn't quite ready to unleash another round of easing. Still, traders remained hopeful that easing may be on the way in the near future.
Meanwhile, China slashed its benchmark lending and deposit rates.
This comes at a time when the economic backdrop is growing to be increasingly dim. The growth rate in U.S. and China appears to be slowing down, while Europe's woes continue deepening. Indeed, Spain, the fourth-largest eurozone economy, is planning on asking the European Union for help rescuing its banking sector this weekend, according to a report by Reuters, citing unnamed sources. A separate report from Dow Jones Newswires says high-level EU officials will be talking on a conference call this weekend.
The U.S. trade deficit narrowed in April to $50.06 billion from $52.62 billion in March. Economists had been expecting the deficit to fall to $49.5 billion. Looking into the report, exports dipped 0.8%, while imports dropped 1.7%. While the report is a lagging indicator, the difference between the imports and exports figures directly into broader gauges of second-quarter economic growth. The bigger the deficit, the more it detracts from gross domestic product.
Commodities were mixed. The benchmark crude oil contract traded in New York slipped 72 cents, or 0.85%, to $84.10 a barrel. Wholesale New York Harbor gasoline rose 0.01% to $2.69 a gallon.
In metals, gold climbed $3.40, or 0.21%, to $1,591 a troy ounce.
The Euro Stoxx 50 rose 0.04% to 2144, the English FTSE 100 slid 0.23% to 5435 and the German DAX slumped 0.22% to 6131.
In Asia, the Japanese Nikkei 225 tumbled 2.1% to 8459 and the Chinese Hang Seng skidded lower by 0.94% to 18502.