Thursday 15th September 2011
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German and French conviction that fiscally-embattled Greece will stay in the euro zone has bolstered equities on Wall Street.
German Chancellor Angela Merkel and French President Nicolas Sarkozy expressed their confidence after a conference call with Greek Prime Minister George Papandreou earlier today.
In late afternoon trading, the Dow Jones industrial average climbed 1.49%, the Standard & Poor's 500 Index rose 1.41% and the Nasdaq Composite Index gained 1.61%. In Europe, the Stoxx 600 index closed 1.5% higher.
“There’s still hope out there that Europe will get their issues worked out and that Greece is not as big a problem as people think,” Don Wordell, a fund manager for Atlanta-based RidgeWorth Capital Management, told Bloomberg News.
The optimism bolstered the appeal of the euro, last 0.6% stronger at US$1.3766 and up 0.2% to 105.47 yen.
However, not everything is improving.
World Bank President Robert Zoellick said the world had entered a new economic danger zone and that Europe, Japan and the U.S. all needed to make hard decisions to keep the global economy from further slowing.
"Unless Europe, Japan, and the United states can also face up to responsibilities they will drag down not only themselves but the global economy," Zoellick said in a speech at George Washington University on Wednesday, Reuters reported.
"They have procrastinated for too long on taking the difficult decisions, narrowing what choices are now left to a painful few," he said, according to a prepared text of his remarks.
The day had begun on a sour economic note as reports showed that inventories in the U.S. increased less than forecast in July, suggesting companies were anticipating sluggish demand, while retail sales in the U.S. unexpectedly faltered in August.
There are gloomy predictions, such as the one from Ed Yardeni, chief investment strategist at Yardeni Research Inc, who told Bloomberg News that U.S. stocks will stay at current levels in 2011 as companies struggle to beat analyst estimates amid slower economic growth,
The current conditions prove a challenge even the most popular of companies are not willing to risk when it comes to raising money.
Even social media sensation Facebook apparently isn’t immune. It now is planning to pursue an initial public offering in the U.S. toward the end of next year, later than had been anticipated, according to a Financial Times report, citing people familiar with the company.
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