For the week ended July 15, 2011

Week in Review: Stocks battered by worries of downgrade and debt contagion

• U.S. House announces plans for vote on debt ceiling
• Moody's cuts Ireland's debt to junk status
• S&P says 50% chance U.S. debt will be downgraded
• Bernanke says Fed not likely to buy more bonds soon
• Consumer, producer, and import inflation tamed by drop in energy costs
• Investment banking boosts JPMorgan, Citigroup profits

Stocks fell around the world this week amid deepening worries about the risk of contagion in Europe and the fiscal and economic woes of the United States. Italy's borrowing costs soared to their highest level in more than a decade amid fears over the country's solvency and political stability, and gold prices rallied to a record high as fears over Europe's sovereign debt crisis spurred investment demand for safe-haven assets. Throughout the week investors watched as rating agencies doled out and threatened more downgrades, European finance ministers continued their struggle to contain the region's sovereign debt crisis, and as U.S. lawmakers battled over raising the U.S. debt ceiling.

U.S. and global economic news

The U.S. House of Representatives announced Friday that it plans to vote next week on a measure that would raise the government's debt limit by $2.4 trillion, cut spending, cap government expenditures, and propose a balanced-budget constitutional amendment. President Barack Obama and congressional leaders from both parties have been meeting daily in search of a compromise that would cut the deficit and allow for the government to sell debt after its borrowing authority is exhausted August 2.

Google's profits jump 36%

Google reported a stronger-than-expected 36% jump in second-quarter profits as revenues rose to a record level. Google benefitted throughout the quarter from strength in its core search business. It also gained traction with its new operations, including its new social network Google+.

Craig Barton 310-379-9621