Slipping Dow rebounds to close above 10000 on unemployment report
After spending much of Friday below 10000, the market recovered lost ground amid positive news about unemployment. But the government-debt crisis in Greece is prompting investors to worry, again, about the health of the financial system.
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The sovereign-debt troubles for now are centered in Europe, putting pressure on the Continent to hold its currency union together. Greece has one of Europe's highest government debt loads, as a share of its gross domestic product. Its annual budget deficit alone is now 12.7 percent of GDP, far higher than the European Union limit of 3 percent. On Thursday, many Greek government workers walked off the job – a signal of how hard it may be to tame the debt problem without a currency devaluation or outside help from the International Monetary Fund or the European Union.
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The US dollar has risen as the long-ascendent euro currency stumbled.
But the troubles of Greece have also revived broader concerns that the world's financial system remains fragile. The credit problems range from still-troubled real estate loans to governments where debts have soared because of recession-related spending or tax-revenue shortfalls.
The US fiscal position, for example, is not much different from Greece's debt load of 95 percent of GDP. America has a GDP of about $14.5 trillion, while its $12 trillion debt is forcing Congress to consider a boost to the "ceiling" of allowable borrowing.
The big question mark in the days ahead will be whether the fears surrounding sovereign debts can be contained. (Greece will be hot topic as finance ministers from the Group of Seven meet this weekend in icy Iqaluit, on Canada's Baffin Island.)
Concern, too, about tepid recovery
Beyond that, there's still the question about the pace of economic recovery. A drop in the prices of oil and gold this week in part reflects a cooler view of the economy, with less risk of inflation.
But Friday's US job report showed some positive trends. The unemployment rate fell, as did the number of Americans working part time because they couldn't find full-time work.
Some economists predict strong job gains to begin within a few months. Michael Darda of MKM Partners in Greenwich, Conn., expects healthy gains of 200,000 to 300,000 jobs per month.
Material from wire services was used in this report.
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