A new earthquake rocks Japan, as U.S. investors roll with the aftershocks of multiple world events. Market activity this week will also be fueled by key economic reports on the state of the American economy.
The AP reported a magnitude-6.5 earthquake shook eastern Japan early today, prompting the Japanese government to issue a tsunami alert. The Japanese government also confirmed that highly radioactive water in the turbine rooms of three of the reactors at the Fukushima Daiichi nuclear plant indicate a partial meltdown had taken place, the Wall Street Journal reported today. Efforts to reconnect the cooling system must overcome this latest hurdle, and supplies to manufacturers worldwide remain disrupted.
President Obama will address the nation tonight to clarify the nation’s role in Libya. Sunday night American and European forces bombed Col. Muammar el-Qaddafi’s tribal homeland of Surt, and rebels are renewing their march on the city, setting the stage for a battle that could help decide the war, the New York Times reported today.
Unrest in the Mideast grows in Yemen, Bahrain and Syria, where ruling governments face popular uprisings inspired by the successful pro-Democracy movement in Egypt.
International concerns about the European debt crisis and political instability in the Mideast create financial uncertainty, but the U.S. budget crisis and key economic reports due this week may also contribute to volatility, CNNMoney.com said.
The White House and Democratic lawmakers are preparing a proposal to cut an additional $20 billion in federal spending to avoid a government shutdown that could take place in less than two weeks, the Wall Street Journal reported today. The cuts would come on top of $10 billion in cuts already enacted, but it’s not clear that they will be enough to satisfy Republicans, who initially asked for $61 billion in cuts to stem a federal deficit scheduled to grow to a record $1.65 trillion this year.
The Labor Department March jobs report due Friday could potentially set the financial stage for the remainder of March, CNNMoney.com said. Job growth has lagged behind the economic recovery and most investors feel job creation is needed to sustain growth.
The price of U.S. Treasuries fell, pushing yields to a two-week high, as the U.S. prepares to sell $35 billion of two-year debt today in the first of three auctions this week, said Bloomberg.com. The Treasury is scheduled to follow today’s two-year sale with a $35 billion five-year auction tomorrow and a $29 billion seven-year offering on March 30, Bloomberg.com said.
Other key reports coming out this week are the February personal income and spending figures released later this morning by the Commerce Department, and pending home sales released today by the National Association of Realtors, CNNMoney said. On Tuesday, the Conference Board will publish March consumer confidence figures and a sharp drop in confidence is expected. The S&P/Case-Schiller Home price index for January will also be released on Tuesday. The week also includes three-labor related reports and the Commerce Department’s February factory orders report.
The stock market closed on a high note Friday, buoyed in part by revised estimates that showed the U.S. economy grew more in the fourth quarter than previously reported, said the New York Times. The Commerce Department announced that the economy grew by 3.1 percent up from the 2.8 percent estimate issued last month. An increase in consumer spending led the growth.
Investors overlooked a sharp drop in consumer confidence on Friday and pushed stocks up for the third consecutive day, ending the best week for the Dow Jones industrial average since July, said The New York Times. All three stock indexes gained more than 2 percent for the week, helping to erase losses after the March 11 earthquake hit Japan.
Worries about the earthquake and its aftermath, as well as the rising cost of fuel, caused a sharp drop in the consumer confidence index released by Thomson Reuters /University of Michigan on Friday. The index fell from 77.5 in February to 67.5 percent, the lowest level since November 2009, reported Bloomberg.com.
Layoffs can be added to “rain, sleet, snow and heat of day” as the U.S. Postal Service considers suspending Saturday mail service. This year the agency is eliminating 7,500 jobs and closing seven district offices across the country to address record losses, the New York Times said. The agency lost $8.5 billion in fiscal year 2010, as Americans turn increasingly to the internet to communicate and pay bills. Projected losses for 2011 are $6.4 billion.
Increased social media use might not be helping the public either. The American Academy of Pediatric Medicine has issued a report that identifies a syndrome afflicting today’s teenagers. It’s called “Facebook Depression.”