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Europe Crisis, Stagnant Job Market Plague Investors

5 September 2011 - News - Editor

Investors face a new week on Wall Street with Europe's financial crisis and non-existent job growth fuelling fears of a double-dip recession. While some analysts are of the opinion that the United States is likely to avoid a recession, even if only by a narrow margin, others feel that it is only a matter of time before the economy slips into recession territory. Last week’s report of zero job growth, among other factors, resulted in consumer confidence falling to its lowest level since August 2009. With consumers fearful of job losses, the majority of consumers are holding back on buying anything that is not considered to be an absolute necessity, which in turn hits retailers and consumer product suppliers as trade slows down, and the economy slows down with it.

In the upcoming week, there is no economic data expected to lift the confidence of wary investors. Weekly jobless claims are likely to be the most influential economic reports perused by investors as they try to make sense of what is happening in the labor market. President Obama will be addressing Congress during the week, to lay out his administration's strategy for breathing some life back into the US job market, but with Congress divided politically, hopes are slim for any plans to move ahead quickly.

With regard to the problems facing European countries, causing ripple effects through the global economy, Wall Street investors are likely to be focusing on how bond markets in Europe perform, and how authorities respond to the crisis, with a view to determining whether lenders and borrowers will meet commitments and thereby by reestablish confidence in the financial system of the European Union.

Pep Boys (NYSE:PBY) will be reporting quarterly earnings on Tuesday, while the manufacturing report for August will be released by the Institute for Supply Management, with economists expecting a decline in the reading from July’s 52.7 to 51 for August. Corporate results on Wednesday include Talbots (NYSE:TLB) and Hovnanian Enterprises (NYSE:HOV). Also on Wednesday, the weekly report from the Mortgage Bankers Association on the number of Americans who filed mortgage applications will be released, as will the Federal Reserve's September Beige Book.

Thursday sees the much awaited weekly initial jobless claims from the Labor Department, where economists expect 400,000 to have filed new claims for unemployment benefits. The Federal Reserve's consumer credit report for July is due on Thursday afternoon. Wholesale inventory figures will be release on Friday morning, and second quarter corporate results are due from Lululemon Athletica (NAADAQ:LULU).

 


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