Thursday, July 9, 2009
Investors looking for clear signs the economy is beginning to stabilize yesterday instead found more ambiguity in various economic reports. That, along with a slump in crude oil prices, left stocks flat, with the Dow Jones industrial average squeezing out a gain of just 0.2 percent to close at 8178.41.
The International Monetary Fund compounded investors' anxiety with a report forecasting that the world economy would contract 1.4 percent this year, more than it previously thought. But for 2010, the IMF raised its forecast for global economic growth to 2.5 percent, compared with its previous forecast of 1.9 percent. The recovery will be weak and uneven throughout the world, the IMF said. In the United States, economic output should stabilize in second half of this year and gradually recover in 2010.
Aluminum maker Alcoa reported a loss of $454 million during the second quarter, compared with a profit of $546 million during the corresponding period a year earlier. But excluding the cost of scaling back production and layoffs, the company's earnings beat some analysts expectations. Revenue tumbled 41 percent, to $4.24 billion. It is a shaky start to a corporate earnings season during which companies in the Standard & Poor 500-stock index are expected to report a 35 percent drop in profits. Raw materials producers such as Alcoa are expected to lead the losses with an 79 percent drop in earnings, according to Thomson Reuters.
Americans continued reducing their borrowing levels in May, as they sought to unwind their heavy indebtedness. Consumer credit outstanding fell at a 1.5 percent annual rate, to $2.52 trillion, the Federal Reserve said yesterday. That includes credit card debt, car loans, and personal loans other than home mortgages. The decline reflects both that consumers are eager to carry less debt and that lenders are less willing or able to extend loans. The decline is less steep than in recent months; consumer credit dropped at a 7.8 percent annual rate in April.
-- Renae Merle