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Health & Fitness

WEEK N REVIEW

Financial market volatility climbed, as investors focused on the US Federal Reserve’s anticipated phasing out of its monetary stimulus program. Markets are now responding counter intuitively to news about the US economic recovery. Economic strength is seen in a negative light, as it could mean a quicker end to easing, while weakness’s silver lining is the greater likelihood that the Fed’s monetary stimulus will be extended. With few major economic reports and a pause in corporate earnings news, the markets have been rife with speculation about possible near-term changes to Fed policy.

 

Japan’s financial volatility dominated global market trends again. Since the roaring Tokyo bull peaked on 22 May, the Nikkei Stock Average has tumbled more than 20%. However, Japan’s stock market still retains a substantial year-to-date gain. Global investors have experienced heightened nervousness in recent weeks after an exuberant extended rally. Overall, major stock indices bounced around this week, with sharply higher volatility becoming the norm, and bond yields have climbed broadly. US mortgage rates rose for a sixth straight week, reflecting higher 10-year US Treasury yields and concerns about upcoming Fed tightening.

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On Friday, the Fed was advised to step carefully in scaling back from its monetary easing by the International Monetary Fund, which also cut its U.S. growth outlook for next year to 2.7% from the 3% projected in April. After climbing 29 points and falling 131, the Dow Jones Industrial Average lost 105.90 points, or 0.7%, to 15,070.18. Down 1.2% for the week, the Dow on Friday made its fourth consecutive triple-digit move.

A day after its best session since Jan. 2, the S&P 500 index retreated 9.63 points, or 0.6%, to 1,626.73, with financials pacing the losses that included all but one of its 10 major sectors. The S&P 500 finished with a 1% weekly drop.

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The Nasdaq Composite shed 21.81 points, or 0.6%, to 3,423.56, leaving it off 1.3% from last Friday’s close. Decliners ran ahead of advancers on the New York Stock Exchange, where nearly 626 million shares traded. Composite volume neared 2.9 billion.

Energy prices rose, with crude-oil futures climbing to highs not seen since September, up $1.82 at $97.85 a barrel on the New York Mercantile Exchange. Gold also gained, with futures rising $9.80 to close at $1,387.60 an ounce.

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