May 6, 2005: The US economy week in review

May 6, 2005: The US economy week in review

It was a fairly positive week for a soft-footed US economy as a strong jobs growth tempered concerns that it was headed for another downturn. US companies reportedly added 274'000 new jobs to their payroll in April. News of the jobs report sent a jolt to the flagging dollar. The euro fell from $1.2945 to $1.2818 in late trading while the yen dropped to 134.36 from 134.60. Earlier in the week the Federal Reserved raised a key short-term rate used by banks to determine lending rates by a quarter of a percentage point. The overall rate now stands at a modest 3%. The rate hike is the eighth straight. The Fed is widely expected to raise the rate twice more to bring it to a more “neutral” 3.5%. Reaction from the markets this week was mixed. The big news for the week was Standard and Poor's announcement on Thursday that it was cutting General Motors and Ford's debt rating to junk status. The markets responded by slipping 44.52 points. Friday's news of the better-than-expected jobs report gave the market a brief respite that later corrected itself as fears of rising inflation and interest rates crept into investor's minds. For the day, the Dow Jones ended up slightly 5.02 to close at 10'345.40. For the week the market ended up about 2.7%.