Wall Street indexes eased upward in early trading on Thursday after the government said more people applied for unemployment benefits last week. þþFirst-time applications for unemployment rose to 454,000, the highest level since late October. Economists had expected the number to rise to 407,000. Snowstorms in some parts of the country forced companies to lay off workers. þþAlso weighing on the markets is a downgrade of Japan’s debt by the Standard & Poor’s ratings agency. þþAmazon.com, AT&T, Caterpillar and the Microsoft Corporation are among the several large companies scheduled to report by the end of the day. þþNetflix announced after the market closed Wednesday that it beat analysts’ expectations last quarter. The movie-rental company now has more than 20 million subscribers. þþIn early trading, the Dow Jones industrial average was up 12.75 points, or 0.1 percent, to 11,998.19. The Standard & Poor’s 500-stock index gained 2.59 points, or 0.2 percent, to 1,299.22, while the Nasdaq rose 12.29, or 0.5 percent. þþLater this morning, the Financial Crisis Inquiry Commission will release its final report on the causes of the 2008 financial crisis. The commission is expected to say that the crisis was avoidable and that the Bush and Clinton administrations bear some responsibility for its cause. þþThe National Association of Realtors will issue its report on pending home sales in December. þþThe Dow Jones industrial average closed yesterday at 11,985.4 after breaking above 12,000 during the trading day for the first time in two and a half years. The index has gained nearly 85 percent since its low in March 2009. þþEuropean indexes were mostly higher, however, after the Federal Reserve gave few, if any, indications that it is thinking about changing its policy anytime soon. That suggests interest rates will remain at historically low levels and that the central bank will continue its program to pump $600 billion into the United States economy — a welcome combination for stock market investors. þþBut a big concern in the markets was the news that S.&P. cut its rating on Japan’s debt by one notch to AA- from AA. Though the agency had Japan on notice for a downgrade, the scale of its criticism of Japan’s efforts to get a grip on its debts was surprising. The dollar was trading 0.8 percent higher on the day at 82.89 yen after trading as high as 83.20 yen. þþ“In our opinion, the Democratic Party of Japan-led government lacks a coherent strategy to address these negative aspects of the country’s debt dynamics, in part due to the coalition having lost its majority in the upper house of parliament last summer,” S.&P. said. þþThe agency projected that Japan’s fiscal deficit will remain high for the next few years and that the government will have difficulty managing its debt amid persistent deflation and a rapidly aging population. þþIt is forecasting Japan’s annual fiscal deficit will fall only modestly from an estimated 9.1 percent of national income in the fiscal year 2010 to 8 percent in fiscal 2013. þþJapan’s debts have raised eyebrows for many years and its cumulative national debt is nearly twice its G.D.P. þþHowever, they’ve not proved to be too much of a worry as most of the debt is held by domestic investors — only around 4.5 percent of Japanese government bonds are held by foreigners. þþDerek Halpenny, European head of global currency research at the Bank of Tokyo-Mitsubish UFJ, said the downgrade ”will certainly up the pressure on the government to become more pro-active in creating a long-term fiscal strategy.” þþThe downgrade had no impact on Asian stocks as it was released after markets closed. Japan’s Nikkei 225 stock average closed 0.7 percent higher at 10,478.66 after the Finance Ministry announced that export growth had accelerated for the second straight month in December, indicating a revival of overseas demand. þþJapan’s debt issues have come to the surface at a time when concerns over Europe’s debt crisis have diminished somewhat amid growing signs that policy makers have gotten a grip on the situation. þþThe underlying improvement in sentiment in Europe has buoyed the euro for much of January. By late morning London time, the euro was up a further 0.1 percent on the day at $1.3728, just shy of an earlier fresh two-month high of $1.3756. þþEuropean stocks were also well-supported, with the DAX in Frankfurt up 0.4 percent and the CAC 40 in Paris 0.2 percent higher percent. The FTSE 100 in London was up 0.2 percent. þþEarlier in Asia, South Korea’s Kospi added 0.2 percent to 2,115.01 while Hong Kong’s Hang Seng fell 0.3 percent to 23,779.62. þþThe Shanghai Composite Index climbed 1.5 percent to 2,749.15, and the Shenzhen Composite Index for China’s smaller, second market rose 1.8 percent to 1,174.67 after struggling to achieve gains earlier in the new year. þþ
Source: NY Times
