U.S. Stocks Fall, Italian and Spanish Bonds Rise with Euro (Bloomberg)
Stocks fell today, influenced by two factors: Macy’s Inc. reduced its earnings forecast, reflecting a drop in retailers. The second factor in the stock slide was that economists predicted the Federal Reserve will begin to taper its bond purchases next month. “The market is scope-locked on Fed tapering in September,” Douglas Cote, chief market strategist at ING U.S. Investment Management in New York, said. “Quantitative easing is creating some excess in the financial system. The last thing Bernanke wants when he finishes his term is to be responsible for the next bubble.” Despite this decline, however, Italian and Spanish bonds rose with European shares as the euro came out of its year-and-a-half-long recession.
Germany, France Propel Fragile Euro Zone (Reuters)
An increased pace of consumer spending and renewed business in Germany and France have caused both economies to grow faster than expected in the second quarter, pulling the euro zone out of a one-and-a-half-year-long recession. However, with countries like Spain and Italy still struggling, the euro zone’s economy still shows signs of fragility. “The return to modest rates of economic growth in the euro zone as a whole won’t address the deep-seated economic and fiscal problems of the peripheral countries,” researchers at Capital Economics wrote.
Obamacare Causing Businesses to Cut Employee Hours (CNBC)
Employers around the country, spanning from the fast-food industry to universities, will be forced to cut employees’ hours below 30 per week because they can’t afford the health insurance mandated by the Affordable Care Act, also known as Obamacare. “To tell somebody that you’ve got to decrease their hours because of a law passed in Washington is very frustrating to me,” said Loren Goodridge, who owns 21 Subway franchises. “I know the impact I’m having on some of my employees.” Goodridge added that he’s cutting the hours to no more than 29 hours a week so he won’t trigger the provision that requires employers to offer coverage to employees who work 30 hours or more per week. Obamacare will take full effect in 16 months.
