Stocks turned higher following Europe as fears of a renewed sovereign debt crisis eased somewhat and as investors wait for news on the state of the U.S. economy from the Federal Reserve Beige Book.
Earlier Wednesday, stocks looked set to continue the negative momentum of the previous session. That turned around after an auction of Portuguese government bonds successfully raised 1.04 billion euros ($1.32 billion).
Applications to buy new homes rose 6.3 percent last week, the highest pace since May, but refinance applications dropped, leading to a total seasonally adjusted fall of 1.5 percent in loan requests, the Mortgage Bankers Associations reported Wednesday morning. Applications for new homes are still nearly 40 percent behind a year ago.
The main economic news of the day is the Federal Reserve’s “beige book,” a region-by-region assessment of the nation’s economy, due out at 2 p.m. The government also will issue July consumer credit figures at 3 p.m. Economists are expecting outstanding credit to have dropped by $5.3 billion in July, following a decrease of $1.3 billion in June.
President Barak Obama travels to Cleveland Wednesday to gather support for billions of dollars in new business tax incentives and infrastructure spending. Some doubt the President can convince Congress (Republicans) to pass those measures ahead of the mid-term elections. Obama will also state his opposition to extending tax cuts for the wealthiest Americans.
The reductions that Bush signed into law in 2001 and 2003 are due to expire at the end of this year, a deadline that has inspired a debate over whether letting them lapse is prudent fiscal policy or a job-killing tax hike. When he speaks this afternoon in Cleveland, Obama will call for extending the tax cuts for most Americans, but ending them for families making more than $250,000 a year and individuals making more than $200,000. “This economy is not hurting people that make $800,000 a year, it’s hurting families that are making $40,000 a year,” said White House spokesman Robert Gibbs. Also on Wednesday, the U.S. Treasury will sell $21 billion in 10-year notes, with the results available shortly after 1 p.m. The Treasury is set to sell $13 billion in 30-year bonds Thursday.
Ireland:
The fate of the Irish economy is back in focus for investors across the world, after the former Celtic Tiger extended guarantees to its banking industry and depositors and with the spread on Irish bonds hitting record highs. The country is also waiting for a decision from the European Commission on the fate of Anglo Irish, the troubled bank that was nationalized two years ago; uncertainty on whether Anglo Irish will be wound down or allowed to survive has weighed on sentiment towards the country. Ireland is an example of a Western economy adjusting to both the banking crisis and, crucially, the emergence of Asia.
COURTESY: WSG
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