Finance

Morning Market Roundup: Bernanke Says Fed May Act if Economy Weakens, China Cuts Lending Rates

Here’s what’s important in the business world this morning:

Bernanke: Chairman Ben Bernanke says the Federal Reserve is prepared to take further steps if the U.S. economy weakens, but he didn’t signal any action is imminent.

Bernanke says the European debt crisis poses significant risks to the U.S. financial markets. And he noted that U.S. unemployment remains high and the outlook for inflation subdued.

Bernanke’s comments in testimony to a congressional panel came one day after three Fed officials suggested that the central bank may need to do more to help the economy.

Most economists don‘t expect further moves at the Fed’s next policy meeting June 19-20. They note that long-term rates have already touched record lows. Even if rates did decline further, analysts say they might have little effect on the economy.

Unemployment: The number of people applying for U.S. unemployment benefits fell last week for the first time in five weeks.

The Labor Department said Thursday that applications for weekly benefits dropped by 12,000 to a seasonally adjusted 377,000. That’s down from an upwardly revised 389,000 the previous week.

The four-week average, a less volatile measure, rose by 1,750 to 377,500, the highest level in a month.

Oil: Oil is climbing after China’s central bank cut its interest rates to give a boost to its slowing economy.

Benchmark crude rose $1.72, or 2 percent, to $86.74 per barrel in New York. Brent crude gained $1.49 to $102.17 per barrel in London.

The Chinese central back is cutting its benchmark interest rate to try to increase economic growth. China imports large amounts of oil, so the move may help increase demand for oil and other energy products.

At the pump, the national average for a gallon of gasoline fell a half cent overnight to $3.56.

China: China cut its benchmark lending rate Thursday for the first time in nearly four years, adding to efforts to reverse a sharp economic downturn.

The interest rate on a one-year loan will be cut by a quarter percentage point to 6.31 percent effective Friday, the central bank announced. It was the first rate cut since November 2008.

Beijing has rolled out a series of measures to stimulate the economy after growth fell to a nearly three-year low of 8.1 percent in the first quarter and April factory output grew at its slowest rate since the 2008 crisis. Private sector analysts expect this quarter’s growth to fall further.

“The changes indicate mounting concern in Beijing over slowdown of growth,” said Credit Agricole CIB economist Dariusz Kowalczyk in a report.

“We expect a boost to demand for lending as a result of the cuts, although the actual impact will be limited given low demand for credit.”

The government has said it will pump billions of dollars into the economy through spending on building low-cost housing, airports and other public works. It also has approved a wave of major investments by state companies.

The Associated Press contributed to this report.

Comments (16)

  • TRILO
    Posted on June 7, 2012 at 3:04pm

    The stock market is such a false picture of the real American economy. It is so rigged and manipulated.

    Soon we will all be living in the new Weimer Republic. Way to go Ben!

    Report Post » TRILO  
  • Gonzo
    Posted on June 7, 2012 at 1:04pm

    Print more money, and gas will be $6.00 a gallon. Then Obama will demonize the oil companies and push more electric cars at us.

    Report Post » Gonzo  
    • Mutiny
      Posted on June 7, 2012 at 1:51pm

      Romney doesnt cut current Obama spending levels increasing the need for the FED to continue to print money. Do you think Romney doesnt understand the situation or he is owned by the big banks also?

      Report Post » Mutiny  
  • ALL4FREEDOM
    Posted on June 7, 2012 at 12:39pm

    Hey, Ben! Here’s an idea: take all those Euros you swapped for dollars and buy gold with them before the Euro crashes and we’re stuck with worthless paper. (Not that the dollar isn’t nearly worthless, anyway, thanks to you and your pals.) If you think Europe can be bailed out by printing more money, it only shows you’re not thinking. IT CAN’T BE DONE. Greece is all but gone and out of the Eurozone. Spain is on the ropes with too much debt coming due at once. Italy is next in line with her hand out, and Italy is too big to bail. Take a tip form Nancy Reagan and JUST SAY NO, or you might stimulate a commodities boom in tar, feathers, and maybe lead.

    Report Post »  
  • spudwhite
    Posted on June 7, 2012 at 11:20am

    Buy gold on the dips!

    Report Post »  
  • barber2
    Posted on June 7, 2012 at 11:19am

    Hey, Ben: want to improve the economy ? want to restore the people’s confidence ? want to get an inexpensive fix ? Just get Obama and his ” anti-capitlists” out of Washington ! They are in lock step with the French-styled European wackos who are marching over the cliff of economic stupidity ! AND they are destroying people’s confidence which is the hub of the wheel of economic stability.

    Report Post »  
    • Mutiny
      Posted on June 7, 2012 at 1:57pm

      LOL, yeah because Romney with his no cuts in current spending, and “I am not going to waste time on the FED” comments really instill confidence.

      Do you think Romney is owned by the big global banks and is pushing for the bankruptcy so they can usher in global government or does he have a complete lack of understand of economics?

      Report Post » Mutiny  
  • Detroit paperboy
    Posted on June 7, 2012 at 10:51am

    I have an idea, cut govt by 50% at all levels, reduce taxes, give incentive to employ instead of punishing employers and watch us boom………

    Report Post »  
  • copatriots
    Posted on June 7, 2012 at 10:45am

    END THE FED!!!

    If there really is $70 BILLION DOLLARS of “unspent” languishing money, use it toward the National Debt! Somehow I see more wasteful spending in our future. And…..what a bunch of lunatics not knowing what money they already have before authorizing more to be spent! TERM LIMITS!

    http://www.washingtontimes.com/blog/inside-politics/2012/jun/7/federal-govt-sitting-70-billion-unspent-cash/

    Report Post »  
  • lynnissmart
    Posted on June 7, 2012 at 10:39am

    Hey Benjerky, if it didn’t work once, twice, thrice…..then how do expect a different outcome…..you don‘t and that’s the point!!!!

    Report Post »  
  • ChiefGeorge
    Posted on June 7, 2012 at 10:36am

    More vain efforts!

    Report Post » ChiefGeorge  
  • paperpushermj
    Posted on June 7, 2012 at 10:34am

    Ever since Computer Generated Trading kicked in I have not understood the ebbs and flows of the market

    Report Post » paperpushermj  
    • AmazingGrace8
      Posted on June 7, 2012 at 11:48am

      Agree! Seems too much of “buying on margin”. Scary stuff…Oct.1987 hurt alot of people financially.

      Report Post »  
    • Mutiny
      Posted on June 7, 2012 at 2:05pm

      Well actually it has made it easier for the banks to make money. Most of the mutual funds and what not have automatic triggers. When you know the triggers you can predict an outcome. They make more money while average people lose. I read a report the other day that JP morgan had 1.8 trillion in assets but had 70 trillion in derivatives out.

      This game is going to end soon. Get prepared to be able to survive without Walmart and be read for the big hand of the global government to sweep in.

      Report Post » Mutiny  

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