On Tuesday March 15, 2011, 6:14 pm EDT
Japan disaster another
worry for global economy
Japan's earthquake and
nuclear crises have put pressure on the already fragile global economy,
squeezed supplies of goods from computer chips to auto parts and raised fears
of higher interest rates.
The disaster frightened
financial markets in Tokyo and on Wall Street on Tuesday. Japan's Nikkei
average lost 10 percent, and the Dow Jones industrials fell so quickly after
the opening bell that the stock exchange invoked a special rule to reduce
volatility.
Yet the damage to the U.S.
and world economies is expected to be relatively moderate and short-lived. Oil
prices are falling, helping drivers around the world. And the reconstruction
expected along Japan's northeastern coast could even provide a jolt of economic
growth.
A weaker Japanese economy
could help ease global commodity prices because Japan is a major importer of
fuel, agricultural products and other raw materials, notes Mark Zandi, chief
economist at Moody's Analytics. Oil prices fell more than $4 to $97.18 a barrel
Tuesday because of expectations that quake damage will slow Japan's economy and
reduce its demand for energy.
Bank of America economist
Ethan Harris estimates, the disaster would shave just 0.1 percentage point off
global economic growth -- to 4.2 percent this year.
Japan feeds more money to
banks as stocks slump
TOKYO (AP) -- Japan's
central bank pumped billions more into the financial system Tuesday to quell
fears that the country's banks could be overwhelmed by the impact of the
massive earthquake and tsunami. Stocks slumped for a second day as a nuclear
crisis escalated.
Two cash injections
totaling 8 trillion yen ($98 billion) came a day after the Bank of Japan fed a
record 15 trillion yen ($184 billion) into money markets and eased monetary
policy to support the economy in the aftermath of Friday's 9.0 magnitude quake
that has killed thousands.
The injections have helped
stabilize currency markets. But stock markets dived for a second day as
investors unloaded assets amid escalating worries of a nuclear crisis.
Fed says economic recovery
on firmer footing
WASHINGTON (AP) -- The
Federal Reserve offered its most optimistic view of the U.S. economy since the
recession ended, even as Japan's nuclear crisis stoked new worries around the
globe.
The economic recovery is on
"firmer footing" and the jobs market is "improving
gradually," the Fed declared in its statement released at the conclusion
of its meeting Tuesday.
That's a more upbeat tone
from its previous meeting on Jan. 26, when Fed policymakers said the rate of
economic activity was "insufficient" to bring about "significant
improvement" in the job market.
The Fed also downplayed
inflation risks. And it dropped the phrase "disappointingly slow" in
describing the progress made lowering the nation's unemployment rate. That's a
reflection of a nearly full percentage point drop in just three months -- the
sharpest decline in unemployment since 1983.
The Fed on Tuesday, in a
unanimous decision, said it was maintaining the pace of its $600 billion
Treasury bond-purchase program to help the economy grow more strongly and to
lower unemployment, which now stands at 8.9 percent.
Japan boosts holdings of US
debt in January
WASHINGTON (AP) -- Japan
increased its holdings of U.S. government debt for an eighth straight month in
January. But the second-largest holder of U.S. Treasury bonds will likely scale
back its purchases of foreign holdings, and even sell off some, in coming
months to divert money toward rebuilding a nation devastated by a powerful
earthquake and an ensuing nuclear crisis.
The Treasury Department
said Tuesday that Japan boosted its holdings 0.4 percent to $885.9 billion in
January.
Economists said a reduction
in Japan's foreign holdings would put some upward pressure on U.S. interest
rates. But they cautioned the change would have a limited impact.
The Federal Reserve, which
has been buying Treasury securities as part of its efforts to keep interest
rates low, would move to counteract any significant increase in rates, they
said.
The Treasury report showed
that China, the second-largest holder of U.S. debt, reduced its holdings for a
third straight month, trimming them 0.5 percent to $1.15 trillion.
Overall, foreign holdings
of Treasury securities rose 0.3 percent to $4.45 trillion in January. This data
is carefully followed to determine whether foreign countries still have an
appetite for Treasury debt at a time of record federal deficits.
Dim homebuilder outlook
improves slightly
WASHINGTON (AP) --
Homebuilders' pessimistic outlook improved slightly this month, but it remains
dim amid falling home prices and a weak pace of construction.
The National Association of
Home Builders said Tuesday that its index of industry sentiment for March
improved slightly to 17. That's the first gain in five months, after four
straight readings of 16. Any reading below 50 indicates negative sentiment
about the market. The index hasn't been above that level since April 2006.
Last year was the worst in
more than a decade for sales of previously owned homes and the worst for
new-home sales in nearly a half-century.
Fewer homes mean fewer
jobs. Each new home built creates, on average, the equivalent of three jobs for
a year and generates about $90,000 in taxes, according to the builders' trade
group.
Northrop Grumman plans
shipbuilding unit spin-off
NEW YORK (AP) -- Defense
contractor Northrop Grumman Corp. said Tuesday its board has approved the
expected spin-off of its shipbuilding business to stockholders, following
nearly a year of mulling alternatives for the struggling unit.
Under terms approved by the
board, Northrop Grumman stockholders will receive one share of the shipping
business, Huntington Ingalls Industries Inc., for every six shares of Northrop
Grumman stock they hold on March 30.
Shares of the shipbuilding
business will begin trading under the symbol "HII" the next day.
The unit has struggled from
a slowdown in Navy shipbuilding contracts and increased competition from rivals
like General Dynamics Corp. Northrop and other defense contractors have also
been under pressure from the Pentagon to cut costs, forcing them to shrink.
EU to apply stress tests on
its nuclear plants
BRUSSELS (AP) -- Shocked
into action by Japan's atomic crisis, European energy officials agreed Tuesday
to apply stress tests on nuclear power plants and Germany moved to switch off
seven aging reactors -- one of them permanently.
The European Union's energy
chief called for a reassessment of the 27-nation bloc's energy policy, and
questioned what role nuclear power should have in the future.
Energy ministers, nuclear
regulators and industry officials meeting in Brussels found "general
agreement" on the need for tough tests to check whether the EU's 143
nuclear reactors could withstand earthquakes and other emergencies, Oettinger
said.
The stress tests will be
devised using the "strictest" nuclear standards in the bloc and be
applied in second half of the year, he said, adding that plants that fail the
tests would have to shut down.
Irish unemployment tops 14
pct, hits 17-year high
DUBLIN (AP) -- Unemployment
in Ireland has topped 14 percent for the first time since 1994, highlighting
the dire financial challenges facing the new government of Prime Minister Enda
Kenny.
A Central Statistics Office
report Tuesday raised Ireland's previous unemployment calculations over several
months. Analysts blamed exceptionally harsh pre-Christmas weather for the
surprisingly poor figures and warned that further job losses were inevitable
this year.
The report said average
October-December unemployment reached 14.1 percent compared with 13.9 percent
in the previous quarter. Its seasonally adjusted figures were worse, measuring
unemployment at a 17-year high of 14.8 percent in December.
Late card payments fall in
Feb. at top issuers
NEW YORK (AP) -- Major
credit card companies said their customers' payment habits continued to improve
in February.
The top six card issuers on
Tuesday all reported lower rates of payments late by a month or more, a
positive sign for the industry as it continues to recover from huge write-offs
in 2009 and 2010.
Bank of America, Chase,
Citibank, American Express, Capital One and Discover all submitted regulatory
filings detailing lower rates of delinquent payments than in January,
continuing a trend that began early last year.
The rates are expected to
continue to drop, reflecting both a strong effort by consumers to make their
payments on time and the removal of chronic late payers who have seen their
credit cut off from the pool of card users.
By The Associated Press
The Dow Jones industrial
average closed down 137.74 points, or 1.1 percent, at 11,855.42. The S&P
fell 14.52 points to 1,281.87. The Nasdaq fell 33.64 to 2,667.33 .
Benchmark West Texas
Intermediate crude for April delivery dropped $4.01, or 4 percent, to settle at
$97.18 per barrel on the New York Mercantile Exchange. Brent crude fell $5.15,
or 4.5 percent, to settle at $108.52 per barrel on the ICE Futures exchange.
In other Nymex trading for
April contracts, heating oil fell 11 cents to settle at $2.9538 per gallon and
gasoline futures lost 15.7 cents to settle at $2.8029 per gallon. Natural gas rose
2.7 cents to settle at $3.941 per 1,000 cubic feet.