Asian stocks slip after US debt rating dropped
Financial markets in Asia lost ground in overnight trading following a surprise slide on Wall Street when Standard and Poor's downgraded the long-term outlook for the nation's debt to negative. But there are other worries about the strength of the recovering U.S. economy.
It's Tuesday in Asia and the financial markets started out the day slipping as much as 1.5 percent in reaction to what happened on Monday on Wall Street.
Wall Street closed on Monday with the Dow down 140 points -- its worst day in a month. Stocks tumbled after Standard and Poor's rating service lowered its outlook on U.S. debt from stable to negative, and said there's a one in three chance its rating on the debt could slip if Washington doesn't come up with a plan. The White House, however, tried to offer assurances.
"The fact that he and the Republicans agree on a target, $4 trillion in deficit reduction over 10 to 12 years is an enormously positive development," said White House Press Secretary Jay Carney.
Grim outlooks are also having an effect on gas prices, but unlike stocks, they're not plummeting, they're soaring and Wall Street is a quiet accomplice. Speculators in the oil futures market who bid the prices up are betting that things are going to get worse in the Middle East.
"It's not a fear premium, it's a risk premium. They assess the risk and you pay a premium based upon the risk," said energy analyst Phil Flynn.
And that premium is costing consumers about 35 cents extra a gallon, which means in the Bay Area, a gallon of gas is averaging as high as $4.26. It's taking such a toll, AAA says people are actually running out of gas. Their calls for emergency gas service are up 13 percent.
"What you could perhaps draw from this is the fact that people are trying to stretch it when it comes to the gas in their tank a little bit further than they would normally," said Matt Skryja from AAA.
But perhaps the one bright spot in America's economy is its job outlook. The jobless rate dipped last month and hiring sprees by companies like McDonald's could lower the unemployment rate even more. The restaurant chain plans to hire 50,000 people in its one-day hiring event on Tuesday.
"Seventy-five percent of the store managers started out as crew people and the people in the very top management of the corporation also started as crew and so it's not just a hamburger flipping job although it's a great entryway into the job market," said McDonald's restaurant owner and operator Con Freeman.
Of McDonald's 50,000 job positions, the restaurant chain hopes to fill 2,000 of them in Northern and Central California and Northern Nevada.
economy, wall street, business, lilian kim
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