US stocks posted their steepest weekly drop since July 2002 after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is falling into a recession.
Intel Corp led technology companies to their fourth straight weekly decline after the world's biggest chipmaker forecast sales below analysts' expectations.
Shares of Citigroup Inc, the largest US bank by assets, plunged to the lowest level since February 1999 after reporting the biggest loss in its 196-year history.
Home construction fell 14 percent last month, concluding the worst year for the industry since 1980, the US Commerce Department said. Separate government reports showing retail sales fell for the first time since June and manufacturing in the Philadelphia region slid to a six-year low heightened concern that the housing slowdown is infecting the broader economy.
"It looks to me like we're already in a recession," said Jason Cooper, who helps manage about US$2.5 billion at 1st Source Investment Advisors in South Bend, Indiana. "There's nothing out there to say the worst is over."
The Standard & Poor's 500 Index declined 5.4 percent this week to 1,325.19, the lowest level since September 2006. The benchmark for US equities has tumbled 9.8 percent this year, its worst-ever start.
The Dow Jones Industrial Average dropped 4 percent to 12,099.30, extending its decline for this year to 8.8 percent. The NASDAQ Composite Index lost 4.1 percent to 2,340.02. The Russell 2000 Index, whose members have a median market value of US$504 million, dropped 4.5 percent to 673.18. The small-company index's 21 percent decline from its July record marks its first bear-market retreat since 2002. Two-year Treasuries yields sank to 2.35 percent, the lowest since May 2004.
US President George W. Bush's proposed economic stimulus package of up to US$150 billion and Federal Reserve Chairman Ben Bernanke's assurance that the central bank was ready to take "substantive additional action" on interest rates failed to allay investor concern that a weakening economy would hurt corporate earnings.
"You can see almost every member of our government talking about their concern for the economy and what they're trying to do to help, but that only makes it feel worse from the financial markets' point of view," said David Pearl, who helps oversee about US$6.7 billion as head of US equities at Epoch Investment Partners in New York.
More than 100 companies in the S&P 500 will report earnings next week, including Apple Inc, Bank of America Corp and Pfizer Inc. Analysts estimate that fourth-quarter profit for index members as a group fell 17 percent, Bloomberg data showed. That would be the biggest quarterly drop since 2001.
US stock markets will be closed tomorrow for the Martin Luther King Jr holiday.
The Treasury will auction US$21 billion of three-month bills and US$19 billion of six-month bills on Tuesday. Both were yielding 2.85 percent in when-issued trading. The Treasury will sell one-month bills on Wednesday.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
STRUGGLING TO SURVIVE: The group is proposing a consortium of investors, with Tesla as the largest backer, and possibly a minority investment by Hon Hai Precision Nissan Motor Co shares jumped after the Financial Times reported that a high-level Japanese group has drawn up plans to seek investment from Elon Musk’s Tesla Inc to aid the struggling automaker. The group believes the electric vehicle (EV) maker is interested in acquiring Nissan’s plants in the US, the newspaper reported, citing people it did not identify. The proposal envisions a consortium of investors, with Tesla as the largest backer, but also includes the possibility of a minority investment by Hon Hai Precision Industry Co (鴻海精密) to prevent a full takeover by the Apple supplier, the report said. The group is
RSS