"It should provide more confidence to the Fed that the economic recovery has emerged from the political-induced uncertainties of recent months essentially unscathed and reinforce the expectation for the recent improved performance in the data to be sustained"
- Millan Mulraine, senior economist at TD Securities
With less than one week left before the key FOMC meeting, where the Fed can start tapering its stimulus programme, each report has more weigh on markets. Hence, financial markets reacted stronger than usually on the data from the Labor Department and Commerce Department. The number of initial jobless claims rose to 368,000 in the week ended December 7, compared with the prior week's upwardly revised figure of 300,000. The less-volatile four-week moving average climbed 6,000 to 328,750. The data goes in contrast with last week reports showing unemployment rate hit 7%, while non-farm payrolls surprised market to the upside. Also Thursday a report showed sales at American retailers soared most in five months in November, as consumers bought cars and took advantage of discounts in the holiday-shopping season. Retail sales jumped 0.7% after an upwardly revised 0.6% increase in October.
The S&P rating agency decided to cut its U.S. growth outlook amid significant downside risks from federal spending cuts. Currently the agency predicts the world's largest economy to post a 2.6% growth next year, 0.5% lower than the previous estimate made during Credit Conditions Committee meeting. Despite the downgrade they mentioned solid improvement in employment and a broadening recovery in the housing market, are both bolstering consumer mood and spending, which represents the biggest part of the U.S. economy.
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