Stocks mixed Wednesday
NEW YORK, Oct. 17 (UPI) -- New York stock markets were mixed Wednesday morning, despite gains in Asia and Europe.
Moody's Investors Service decided not to downgrade Spain's credit rating, which gave investors confidence, although construction outlays were down 5.5 percent in the Eurozone in August, Eurostat said.
The U.S. Commerce Department said housing starts were robust in September, gaining 15 percent compared to August on a seasonally adjusted annual basis.
After strong rallies Monday and Tuesday positive data was not convincing enough to put Wall Street in a bullish mood.
In early afternoon trading Wednesday, the Dow Jones industrial average gave up 0.87 points or 0.01 percent to 13,550.91. The Nasdaq composite index was up 1.24, or 0.04 percent to 3,102.41. The Standard and Poor's 500 index added 5.51 points or 0.38 percent to 1,460.43.
The benchmark 10-year treasury note was yielding 1.803 percent.
The euro rose to $1.3122 from Tuesday's $1.3055. Against the yen, the dollar rose to 78.96 yen from 78.89 yen.
In Japan, the Nikkei 225 index added 1.21 percent, 105.24 points, to 8,806.55.
In London, the FTSE 100 index gained 0.69 percent, 40.37, to 5,910.91.
U.S. income gap may slow jobs growth
WASHINGTON, Oct. 17 (UPI) -- The widened gap between the wealthiest Americans and the rest of the nation portends slower economic and job growth, analysts say.
"Growth becomes more fragile" in countries with high levels of inequality such as the United States, Jonathan D. Ostry of the International Monetary Fund told The New York Times.
Ostry's research suggests the widening income disparity since the 1980s might limit the nation's economic expansion by as much as a third, the Times reported Tuesday.
Concentrating income in fewer hands could translate into less stable economic expansions and anemic growth, Ostry and fellow IMF economist Andrew G. Berg contend.
The newspaper said the top 1 percent of U.S. households earn about one-sixth of all income, and the top 10 percent take in about half. That's the largest gap since the Great Depression.
The first full year of the recovery also was kind to the wealthiest Americans, with the top 1 percent raking in 93 percent of income gains, the Times said.
IMF economists see this as a serious problem.
"Some dismiss inequality and focus instead on overall growth -- arguing, in effect, that a rising tide lifts all boats," a commentary by IMF economists said. "When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss."
The Organization for Economic Cooperation and Development this year warned the income gap could bring "negative consequences" and suggested changes to tax and spending programs to address it in a meaningful way.
"What worries me is the idea that we're in a vicious cycle," said Joseph E. Stiglitz, a Nobel laureate in economics. "Increasing inequality means a weaker economy, which means increasing inequality, which means a weaker economy. That economic inequality feeds into political economy, so the ability to stabilize the economy gets weaker."
Bank of England split on stimulus
LONDON, Oct. 17 (UPI) -- Bank of England meeting minutes showed the nine-member monetary policy committee was divided on whether it would expand asset purchases.
The U.S. Federal Reserve and the Bank of Japan both agreed to securities purchase increases in recent meetings, but the Bank of England's decision makers left its monetary policy intact after an early October meeting.
The minutes of that meeting, released Wednesday, said, "There were, as ever, limits to what monetary policy could be expected to achieve."
"Some members," the notes continue, "felt that there was still considerable hope for asset purchases to provide further stimulus. Others, while acknowledged that asset purchases had the scope to lower long-term yields further, questioned the magnitude of the impact that lower long-term yields on corporate debt and equity would have on the broader economy."
The decision-making committee said inflation in Britain was "a little above the 2 percent target," and was expected to remain muted. Economists in general fear that adding stimulus to the economy is one way to instigate more inflation.
In the meantime, the minutes said, "Overall there were many factors that could help explain the weakness of productivity growth."
Near to an official recession, the BOE is caught between keeping inflation in check and trying to push a sliding economy forward.
At several points, the minutes report that committee members believe there are many reasons the economy has slowed.
"Indeed different factors had probably been in play at different times," the minutes explain.
Some puzzles remain unsolved.
"Employment had continued to grow strongly despite little change in underlying activity," the BOE said, while noting the positive impact of previous asset purchases.
"On the household side, that response (to a survey) had been positive: Mortgage availability was reported to have increased markedly ... and was expected to increase further," the bank said.
The impact was less pronounced for corporations, however, with loan availability "broadly unchanged," the bank said.
Construction outlays up in Europe
BRUSSELS, Oct. 17 (UPI) -- Construction spending rose modestly in Europe in August, the European Union's statistical office Eurostat said Wednesday.
Spending rose 0.7 percent in the 17-member eurozone compared with July. In the 27-member European Union, spending rose 0.2 percent month to month, the data office said.
Compared to August 2011, however, spending fell in both the eurozone and the EU, dropping 5.5 percent and 6.8 percent, respectively, Eurostat said.
On an annual basis, construction outlays fell furthest in Portugal, Slovenia and Slovakia, down 17.3 percent, 14.8 percent and 11.9 percent, respectively. Construction made gains of 5.1 percent in Romania, 1.3 percent in Bulgaria and 1 percent in Sweden, representing the sharpest annual declines.
