As the idea of recession sinks in on Wall Street, traders are looking beyond the abyss in hope of a quick recovery for the US economy that could help avert a prolonged bear market.
Stocks posted solid gains over the past week even after US Federal Reserve Chairman Ben Bernanke finally uttered the “R” word and economic data appeared to confirm a significant downturn is underway.
The Dow Jones Industrial Average rallied 3.2 percent in the week to Friday to 12,609.42 and the Standard & Poor’s 500 broad-market index leapt 4.2 percent to 1,370.40.
The NASDAQ composite dominated by tech shares vaulted 4.9 percent to 2,370.98.
Wall Street has started off the second quarter on a strong note after a horrific start to the year. The main indexes remain lower for 2008 with the Dow off 4.9 percent, the NASDAQ 10.6 percent weaker and the S&P down 6.7 percent.
Stephen Auth, chief investment office at Federated Investors, said he believes the broad market can manage a gain of around 10 percent for the year even with the economy in recession.
“We expect that the recession will be short and shallow, ending in the second half of the year,” he said in a note to clients. “Our outlook for equities anticipates a return to reasonable economic growth later this year and into 2009.”
Bonds were mixed. The yield on the 10-year Treasury bond rose to 3.481 percent from 3.466 percent a week earlier.
The yield on the 30-year bond fell to 4.381 percent from 4.345 percent.
Bond yields and prices move in opposite directions.
In the coming week, the markets digest data on the US trade balance, and also will monitor the upcoming IMF economic outlook and meeting of G7 finance ministers.
Tropical Storm Usagi strengthened to a typhoon yesterday morning and remains on track to brush past southeastern Taiwan from tomorrow to Sunday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, the storm was approximately 950km east-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, the CWA said. It is expected to enter the Bashi Channel and then turn north, moving into waters southeast of Taiwan, it said. The agency said it could issue a sea warning in the early hours of today and a land warning in the afternoon. As of 2pm yesterday, the storm was moving at
UPDATED FORECAST: The warning covered areas of Pingtung County and Hengchun Peninsula, while a sea warning covering the southern Taiwan Strait was amended The Central Weather Administration (CWA) at 5:30pm yesterday issued a land warning for Typhoon Usagi as the storm approached Taiwan from the south after passing over the Philippines. As of 5pm, Usagi was 420km south-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost tip, with an average radius of 150km, the CWA said. The land warning covered areas of Pingtung County and the Hengchun Peninsula (恆春), and came with an amended sea warning, updating a warning issued yesterday morning to cover the southern part of the Taiwan Strait. No local governments had announced any class or office closures as of press time last night. The typhoon
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
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