Market Struggles as Italian Senate Passes Austerity Package

The market is struggling to gain ground this morning with the Nasdaq posting a 14 point loss so far. The S&P 500 has also posted a slight loss this morning falling 2 points. The Dow is the only index in the black showing a small gain of 9 points heading into the midday trading hours. Let’s take a look at the factors causing such volatility in the market.

The Italian Senate passed an austerity package worth $99 billion aimed at convincing investors that the third largest economy in the European Union would not be swept into the debt crisis. Despite the austerity measures Italian Finance Minister Giulio Tremonti warns that country specific measures are good but the need for sweeping measures to eliminate debt turmoil in the region is where the European Union needs to focus. Tremonti stated the austerity package included reducing tax breaks in 2013 and 2014 and measure to help balance the budget by 2014.

Federal Reserve Chairman Ben Bernanke sat before Congress again Thursday. Chairman Bernanke expressed the need for Congress to be cognisant of its want for large cuts to government spending that could derail an already fragile economic recovery period. Bernanke went on to tell Congress that a U.S. default on its debt would be devastating for not only the U.S. economy but for the global economic situations as well. If the government fails to raise the debt limit it would be perceived as a “Self-Inflicted Wound”.

On a positive note in the market new Unemployment applications dropped by 22,000 to a seasonally adjusted 405,000 the labor department stated. Even after the drop over the last two weeks claims have remained over 400,000 for 14 consecutive weeks. The economy added only 18,000 jobs in June which was the second straight month of dismal hiring. Fed Chairman Ben Bernanke feels that when temporary factors like high gas prices fade growth will begin to pick up in the second half of the year.

While so much negativity has loomed over the market this morning indexes have fought to keep any major sell-offs from happening. There are actually several companies doing well this morning.

ConocoPhillips (Nasdaq:COP) announced that they plan to split into two separate companies. That descision has spurred a $2.00 gain this morning.

JP Morgan Chase & Co (NYSE:JPM) is another big company posting positive gains this morning. While posting a 2% gain this morning JPM announced a 7% increase in revenue for its second quarter.

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