By John Meyer, finance consultant. Eurasia Business News, November 19, 2021

Dow Jones Stock Exchange, Manhattan, New York City- Photo credit : Swann Collins

Inflation worries and fears of new lockdowns in Europe make investors cautious, weigh on stock markets.

European stock markets ended lower on Friday and Wall Street was in disarray at mid-session with the Dow Jones falling as equity markets weighed down by renewed risk aversion linked to the threat a general lockdown in several countries, amid resurgence of the COVID-19 pandemic.

News in Friday morning that will become the first European country to reimpose a full lockdown to tackle a new wave of coronavirus infections blow cold on optimism in Wall Street amid worries this surge could shortly travel across the Atlantic.

In Paris, the CAC 40 ended down 0.42% to 7,112.29 points. The British Footsie dropped 0.45% while the German Dax fell by 0.38%

U.S. Dow Jones decreased today by 0.75%, at 35,601.98 points, at closure time 4:20PM EST.

Crude oil WTI price fell by 3.67%, at $ 76.11 per barrel at 2:29 PM EST while euro currency lost 0.78%, at $ 1.1285, at 4:40 PM EST.

However, the worries in the U.S. should be temporary, since the American economy has strong fundamentals, a dollar which is the reference currency for international trade, a dynamic corporate sector and a massive state investment program in infrastructure. U.S. President Biden signed into law on November 15 a $1 trillion infrastructure bill to repair the nation’s aging roads and bridges, upgrade the electrical grid and expand access to broadband internet, reported the Wall Street Journal. The project received a bipartisan support in Congress. The bill is the largest federal investment in infrastructure in more than a decade in America.

The effect of this vast investment program on the American economy should support productivity growth, which is a driver for wealth of nations.

However, the House of Representatives also voted a roughly $2 trillion education, healthcare and climate package on Friday, as U.S. Democrats corralled their slim majority to approve the centerpiece of President Biden’s economic agenda after months of negotations. Many fear that such spending will not be rightly used, missing their targets and will generate further inflation of consumer prices.

In October 2021, the US Consumer Price Index (CPI)[1] for All Urban Consumers rose 0.9 percent on a seasonally adjusted basis. This represents an annual increase of 6.2 percent since October 2020, not seasonally adjusted, reported the US Bureau of Labor Statistics.

[1] The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.

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