News / USA

World Markets Rise Modestly On Better US Data

Trader Gregory Rowe and specialist Jennifer Klesaris work on the floor of the New York Stock Exchange, Friday, Aug. 12, 2011
Trader Gregory Rowe and specialist Jennifer Klesaris work on the floor of the New York Stock Exchange, Friday, Aug. 12, 2011

Financial markets held on to gains Friday, ending a tough week marked by wild, up and down swings in stock prices.  Fears that the global economy was heading for a downturn fueled sharp declines this week, precipitated by the first ever downgrade of U.S. debt.  Worries intensified on rumors that European countries could be next.  Since then, a few bright spots in the U.S.outlook appear to have stopped the bleeding.  The question is -- for how long?

Wall Street concluded a turbulent week on an upbeat note -- stringing together two back to back days in positive territory.  Reports that jobless claims fell last month helped lift the Dow Jones index nearly four percent higher on Thursday.

And on Friday another report showing consumers spent more than expected in July gave investors a confidence boost.  

But that was last month.  A new report shows consumer confidence plunging to a new low in August.

"Right now consumers are hearing a lot about the volatility in the stock market and the likelihood that there will be further negative news and that certainly doesn't weigh favorably on consumer sentiment. So the degree in which consumers are digesting that and and having that impact on their wallets remains to be seen but we certaintly expect if this negative news continues to make consumers a little bit more hesitant to spend money," said Retail strategist John Long.

In Europe, markets were also broadly higher Friday -- helped in part by a ban on short-selling: a practice in which investors make money by borrowing shares at a higher price -- which they then sell quickly -- hoping the price will drop -- so they can buy them back at a lower price -- and pocket the difference.

Regulators blame short selling for some of the market volatility this week.

German trader Robert Halver expressed relief as the trading week came to a close. "It's Friday, thank God, there's a weekend coming and as you can see the DAX has closed the session in positive territory. Wonderful, I'm happy that the week has ended," said Halver.

On Wall Street, Friday marked the first time in more than a month that major indices have had two good days in a row.

The Dow gained more than one percent - up 125 points.

But the relief may be shortlived -- analystS say the market instability is likely to resume again next week.

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