Page 25 - ARUBA TODAY

BUSINESS Friday 3 November 2017
A25

UK central bank US stocks end mixed on taxes and shaky forecasts

ups rates for first By MARLEY JAY
time in 10 years AP Markets Writer
NEW YORK (AP) — U.S.
By PAN PYLAS stocks finished mixed
Associated Press on Thursday as investors
LONDON (AP) — The Bank pored over House Repub-
of England has raised in- lican’s tax proposals and
terest rates for the first President Donald Trump
time in a decade to con- picked Fed Governor Je-
tain an increase in infla- rome “Jay” Powell to lead
tion stoked by the Brexit the Federal Reserve. Weak
vote, in what is otherwise results from consumer and
a moment of high uncer- health care companies
tainty for the economy.In
a statement Thursday, the pulled those parts of the
bank said it had lifted its market lower.
benchmark rate, which af- The House tax plan would
fects the cost of loans and cut the top corporate tax
savings rates in the wider rate to 20 percent from
economy, to 0.50 percent 35 percent. That helped
from the record low of 0.25 smaller, more U.S.-focused
percent.The hike, which companies, because they
had been widely antici- generally pay higher tax
pated in financial markets, rates than larger firms that Specialist Michael Pistillo, left, and trader Timothy Nick work on the floor of the New York Stock
is the first since July 2007, do a lot of business in other Exchange. U.S. stocks finished mixed on Thursday as investors pored over House Republican’s tax
when world credit mar- countries. Home improve- proposals and the Federal Reserve.
kets started to freeze up ment retailers and home- (AP Photo/Richard Drew)
in what would prove to be builders slumped because The choice of Powell also 81.25 points, or 0.3 percent, local property taxes would
the prelude to the global the bill would reduce the didn’t surprise Wall Street, to a record 23,516.26. The shrink. It sets a 10 percent
financial crisis.However, amount of interest Ameri- as he had been seen as the Nasdaq composite sank tax on profits for overseas
the impact on households cans can deduct on new most likely pick for a week 1.59 points to 6,714.94. subsidiaries of U.S. corpo-
and companies will likely mortgages. That could hurt or so. If he’s approved by The Russell 2000 index of rations and would let U.S.
be modest, as 60 percent home sales, particularly in the Senate, Powell would smaller-company stocks companies return profits
of home-owners are on high-cost areas. replace current Chair Janet picked up 3.77 points, or stockpiled overseas at a
fixed-rate mortgages and The GOP tax plan was most- Yellen when her term ends 0.3 percent, to 1,496.55. one-time 12 percent rate.
the cost of borrowing re- ly what investors expected, in February. He has been Slightly more stocks on the Mahajan said a cut in per-
mains very low by historical said Mona Mahajan, U.S. a Fed policymaker since New York Stock Exchange sonal taxes could boost
standards. A decade ago, investment strategist for Al- 2012 and is generally seen fell than rose.The House consumer spending and
for example, the key rate as favoring lower interest tax plan could go through economic growth, but she
was hiked to 5.75 percent. lianz Global Investors. She
Minutes of the meeting noted that the bill would rates than other top candi- major changes, and Re- thinks companies would
showed that seven mem- immediately lower the cor- dates. Investors expect him publicans have a slimmer spend most of the savings
bers of the nine-strong porate tax rate instead of to keep raising rates at the majority in the Senate. As from a corporate tax cut
Monetary Policy Commit- reducing it over time, an gradual pace the Fed has written, it would double on dividends and stock
tee judged it “appropri- idea some Republicans maintained over the last the standard deduction buybacks instead of invest-
ate to tighten modestly had proposed earlier. few years while continu- used by most taxpayers to ment that would speed up
the stance of monetary “That alone is a win for cor- ing to let its bond portfolio $12,000 for individuals and economic growth.
policy” to return inflation to porations becoming more shrink. $24,000 for families and in- Another part of the bill
target.Inflation, according competitive with global The Standard & Poor’s 500 crease the child tax credit. would reduce the widely-
to the central bank’s quar- peers, especially the small index rose 0.49 points to The deduction for state in- used deduction for mort-
terly projections, should fall cap and domestic com- 2,579.85. The Dow Jones come taxes would be elimi- gage interest for new home
towards target, to 2.1 per- panies,” she said. industrial average added nated and a deduction for loans. q
cent, in three years — if in-
terest rates rise in the way US workers’ productivity jumps 3 percent in Q3
markets expect, to 1 per-
cent over that period.De- By M. CRUTSINGER ductivity, the amount of fact that overall output, ter, the government report-
spite the hike, the majority AP Economics Writer output per hour of work, as measured by the gross ed last week, and that fol-
on the bank’s committee WASHINGTON (AP) — is not expected to last. domestic product, accel- lowed a 3.1 percent rise in
argued that “monetary U.S. workers’ productivity But economists are hope- erated sharply following a the second quarter. It was
policy continues to pro- jumped 3 percent in the ful that future gains will be weak start to the year. GDP the first back-to-back GDP
vide significant support to third quarter, the strongest stronger than the anemic grew at an annual rate of gains of 3 percent or better
jobs and activity in the cur- gain in three years, while performance of recent 3 percent in the third quar- in three years. q
rent exceptional circum- labor costs remained mod- years. Economists say in-
stances” and that future erate. creasing productivity is the
increases should be grad- The increase in productiv- biggest challenge facing
ual and limited.“In many ity in the July-September the economy currently and
respects, the decision to- quarter was double the 1.5 without an improvement
day is straightforward: with percent gain in the second the Trump administration’s
inflation high, slack disap- quarter, the Labor Depart- goal of boosting economic
pearing, and the economy ment reported Thursday. growth will not be realized.
growing at rates above its Unit labor costs rose a mod- The stronger productivity
speed limit, inflation is un- est 0.5 percent in the third increases in the past two
likely to return to the 2 per- quarter, up only slightly quarters followed a scant
cent target without some from a 0.3 percent gain in 0.1 percent gain in the first
increase in rates,” said
Bank of England Governor the second quarter. quarter this year. The im-
Mark Carney. q The strong upturn in pro- provement reflected the