US stocks finished the first half of the year with a bang as investors welcomed news that the eurozone is a step closer to solving its 30-month-long debt crisis.
The S&P 500 and the NASDAQ posted their best daily percentage gains since December on Friday after an agreement by European leaders to stabilize the region’s troubled banks, a pact that helped remove some of the uncertainty that has plagued markets.
Under pressure to prevent a catastrophic breakup of their single currency, eurozone leaders agreed on Friday to let their rescue fund inject aid directly into stricken banks starting next year and intervene in bond markets to support troubled member states.
They also pledged to create a single banking supervisor for eurozone banks based around the European Central Bank (ECB) in a landmark first step to ward a European banking union that could help shore up struggling member Spain.
TRADING SURGE
Wall Street’s previous reaction to eurozone bailout packages or other rescue plans had been somewhat muted. Initial gains would quickly disappear by the day’s end as investors realized that there isn’t a quick fix to the region’s problems. On Friday, it was a different story. The three major US stock indices jumped 1.5 to 2 percent shortly after the opening bell on news of the eurozone agreement.
By the close, stocks ended at session highs with the major indices up between 2 percent and 3 percent. The Dow Jones Industrial Average surged 277.83 points, or 2.20 percent, to end at 12,880.09. The Standard & Poor’s 500 Index jumped 33.12 points, or 2.49 percent, to finish at 1,362.16. And the NASDAQ Composite Index shot up 85.56 points, or 3.00 percent, to close at 2,935.05.
For the week, the Dow rose 1.9 percent, the S&P 500 advanced 2 percent and the NASDAQ gained 1.5 percent.
For the month, the Dow added 3.9 percent, the S&P 500 advanced 4 percent and the NASDAQ climbed 3.8 percent.
However, for the second quarter, the Dow dropped 2.5 percent, the S&P 500 slid 3.3 percent and the NASDAQ lost 5.1 percent.
Despite the weak second quarter, the three major US stock indices wrapped up the first half of the year with decent gains: The Dow was up 5.4 percent, the S&P 500 was up 8.3 percent and the NASDAQ was up 12.7 percent.
“The next question is whether the ESM/EFSF [European Stability Mechanism/European Financial Stability Facility] will have enough capital and assuming they don’t, will the ECB chip in by giving it a bank license, thus leveraging its size. That is yet to be determined,” said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
EXCESSIVE DEBT
“For now, party on and turn that hourglass over as more time has been bought, but only the symptoms are being fought as the underlying disease of excessive debt and lack of growth still remains,” he said.
Any market reaction to further developments next week could be exaggerated by lighter-than-usual volume. Wall Street trading desks may be more sparsely populated because it will be a short week. US stock markets will be closed on Wednesday, the Fourth of July, in observance of Independence Day. That could break any weekly momentum when Wall Street resumes trading on Thursday.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
INFLATION CONSIDERATION: The BOJ governor said that it would ‘keep making appropriate decisions’ and would adjust depending on the economy and prices The Bank of Japan (BOJ) yesterday raised its benchmark interest rate to the highest in 30 years and said more increases are in the pipeline if conditions allow, in a sign of growing conviction that it can attain the stable inflation target it has pursued for more than a decade. Bank of Japan Governor Kazuo Ueda’s policy board increased the rate by 0.2 percentage points to 0.75 percent, in a unanimous decision, the bank said in a statement. The central bank cited the rising likelihood of its economic outlook being realized. The rate change was expected by all 50 economists surveyed by Bloomberg. The
RSS