Manufacturing gains strength in U.S., while unemployment rises in Spain. Learn more about these and other top news stories of the day.
U.S. Stocks Reverse Weekly Decline
U.S. stocks rose yesterday in response to a better-than-expected manufacturing report , ending higher and reversing last week’s decline, according to Bloomberg News. The Institute for Supply Management’s factory index rose to 51.5 in the past month, signaling an expansion in manufacturing activity. Increased confidence in the European banking industry contributed to the markets’ early gains.
The S&P 500 closed at 1,444.49, an increase of 0.3 percent higher, while the Dow Jones Industrial Average added 0.6 percent to close at 13,515.11, Bloomberg reports. The Nasdaq fell 0.2 percent to 2,794.28. International Business Machines Corp. rose 1.5 percent to reach a new record, while Apple Inc., the world’s largest company in terms of market capitalization, pared earlier gains.
Bernanke Defends Low-Interest Rates
Federal Reserve Chairman Ben Bernanke defended the central bank’s most recent round of quantitative easing during a speech yesterday to the Economic Club of Indiana, Bloomberg News reports. The latest bond-buying program will spur growth, create jobs and ultimately help savers, he said.
The Fed last month announced plans to keep the main interest rate near zero until mid-2015, or later, and purchase $40 billion in mortgage debt each month in an attempt to stimulate employment. Current economic growth rates of 1.5 percent to 2 percent will not lower unemployment, Bernanke said, because the resulting job creation is too weak.
Stronger economic growth is also needed to create sustainable high yields for investors and fuel the housing market recovery, he said.
Low Interest Rates Drive up Auto Sales
Interest rates on new car lows are the lowest on record, a phenomenon that’s spurred automobile sales, according to Bloomberg News. Light-vehicle sales jumped 9.5 percent in August for the fastest pace since the federal government offered “cash for clunkers” three years ago.
Companies, including Toyota, General Motors, Ford, Chrysler and Nissan, are offering free financing on some models, Bloomberg said. The availability and affordability of auto financing have helped put the industry on pace to sell more than 14 million vehicles this year, the best rate since 2007.
Spain Tops Eurozone Unemployment
Spain topped the eurozone’s August unemployment rate, according to the EU statistic agency. Reuters reports that Spain posted a 25.1 percent unemployment rate, followed by Portugal with 15.9 percent and Ireland at 15 percent. The agency said that eurozone unemployment was at an unprecedented high of 18.2 million in August. Japan recorded the lowest unemployment rate, 4.1 percent. The eurozone is struggling to generate the economic growth needed to stimulate employment, Reuters notes. Italy and Spain are stuck in recession and France has registered no growth for the past three quarters. The German economy is an exception, growing 0.3 percent in the second quarter.
Anticipation at the Max for iPad Mini?
CNN could not resist passing on a rumor “from a major Apple investor who says he’s heard it from ‘multiple sources.’” Apple, it is whispered, is preparing to debut the iPad mini, a smaller and less expensive version of the iPad with a 7.85-inch screen. The launch day is projected to be Friday Nov. 2.
Greece Predicts Economy Will Further Contract
Greece is revising its economic forecast downward, the BBC reports. Its economy will contract by 6.5 percent this year, worse than a previous March estimate of 4.8 percent. Greece projects that its economy will shrink for a sixth consecutive year next year. Further austerity measures, which have already prompted anger among citizens, may be in order to raise the extra money. The Greek government, whose economic woes have been eclipsed in recent months by Spain and Italy bailout concerns, hopes to be able to present a final package of measures to the summit of eurozone finance ministers next week.