Investors face US and European central bank meetings next week hoping to see fresh action to spur economies damaged by the eurozone sovereign debt crisis.
Over the week, the Dow Jones Industrial Average gained 1.97 percent, finishing above 13,000 points for the first time since early May. The blue-chip index of 30 stocks finished on Friday at 13,075.66, the highest close since May 4, and the second day of triple-digit gains.
The technology-rich NASDAQ advanced 1.12 percent to 2,958.09 points. The Standard & Poor’s 500, a broad measure of the markets leaped 1.71 percent to 1,385.97 points.
“Stocks rallied throughout the day on speculation that the [US] Federal Reserve and the European Central Bank [ECB] are close to providing further stimulus,” analysts at Wells Fargo Advisors said.
All eyes will be on the Fed when it wraps up a two-day policy meeting on Wednesday.
Economists are divided over whether the central bank’s Federal Open Market Committee will announce additional stimulus for the slowing economy, or wait for more information.
The world’s largest economy slowed in the second quarter as consumers cut back spending on big-ticket items, official data showed on Friday.
The US Commerce Department’s announcement that GDP fell to a 1.5 percent annual rate from 2 percent in the first quarter fueled a big rally on Wall Street, which had expected a worse reading.
Economists say the economy is set to muddle along in the third quarter amid risks from Europe and fears that the government’s year-end tax hikes and spending cuts could push the country back into recession.
“The outlook is worse than the Federal Reserve’s June projections, and as a result we expect to see another round of quantitative easing from the Fed,” said Nigel Gault, chief US economist at IHS Global Insight. “But we expect the Fed to wait until September to act — which would allow it to see two more monthly employment reports — rather than move at next week’s meeting.”
The big week for macroeconomic news culminates on Friday with the keenly awaited US jobs report for this month. Expectations are for the unemployment rate to hold unchanged at 8.2 percent and sluggish jobs growth to continue.
With markets on tenterhooks over the eurozone’s fate as debt-laden Greece looks headed for an exit and yields on sovereign debt of Italy and Spain surge higher, investors will be looking across the pond to the European Central Bank’s meeting on Thursday.
ECB President Mario Draghi’s comments that the bank was “ready to do whatever it takes” to preserve the euro on Thursday sparked massive equities rallies.
Pledges by the leaders of Germany and France on Friday to do “everything” to save the shared currency further eased concerns.
In a joint statement, German Chancellor Angela Merkel and French President Francois Hollande pledged to do “everything to protect the eurozone.”
Wall Street put on an impressive comeback late in the week, after stocks plunged Monday on eurozone crisis fears and the Dow closed Tuesday with triple-digit losses for the third straight day.
Better-than-expected earnings reports from Merck, ExxonMobil and Boeing, among others, spurred bullish sentiment.
Consumers will be in focus on next week’s economic calendar, starting on Tuesday with personal income and spending numbers and a July reading on consumer confidence.
Auto sales data for this month are due on Wednesday. The closely watched Institute for Supply Management’s PMI indices on manufacturing and services are due on Wednesday and Friday respectively.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS