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.
US president-elect Donald Trump said he would “never say” if Washington is committed to defending Taiwan from China, but “I would prefer that they do not do it [ an attack],” adding that he has a “good relationship” with Chinese President Xi Jinping (習近平). “I never say because I have to negotiate things, right?” Trump said in an interview with NBC’s Meet the Press host Kristen Welker after saying he would not reveal his incoming administration’s stance on Taiwan’s defense in the event of an attack. Asked the question again, Trump, in a reference to China, said: “I would prefer that they
CROSS-STRAIT TENSIONS: MOFA demanded Beijing stop its military intimidation and ‘irrational behavior’ that endanger peace and stability in the Indo-Pacific region The Presidential Office yesterday called on China to stop all “provocative acts,” saying ongoing Chinese military activity in the nearby waters of Taiwan was a “blatant disruption” of the “status quo” of security and stability in the Indo-Pacific region. Defense officials said they have detected Chinese ships since Monday, both off Taiwan and farther out along the first island chain. They described the formations as two walls designed to demonstrate that the waters belong to China. The Ministry of National Defense yesterday said it had detected 53 military aircraft operating around the nation over the past 24 hours, as well
TECHNICAL LEAD: The US needs to boost its missile technology and build a communications network able to withstand hackers, Admiral Samuel Paparo said US Indo-Pacific Commander Admiral Samuel Paparo said the US is confident it could defeat China in the Pacific, but that technical advantage is shrinking, the Washington Post reported yesterday. Speaking at the Reagan Defense Forum on Saturday, Paparo said the US needs to maintain its technical lead over China by enhancing missile technology and building a communications network able to withstand hackers, the paper reported. Although the US is able to hit long-distance and difficult targets with its advanced cruise missile system, each launch costs more than US$1 million, he said. By contrast, drones, which are relatively cheap to build and develop, can
‘LAGGING BEHIND’: The NATO secretary-general called on democratic allies to be ‘clear-eyed’ about Beijing’s military buildup, urging them to boost military spending NATO Secretary-General Mark Rutte mentioning China’s bullying of Taiwan and its ambition to reshape the global order has significance during a time when authoritarian states are continuously increasing their aggression, the Ministry of Foreign Affairs (MOFA) said yesterday. In a speech at the Carnegie Europe think tank in Brussels on Thursday, Rutte said Beijing is bullying Taiwan and would start to “nibble” at Taiwan if Russia benefits from a post-invasion peace deal with Ukraine. He called on democratic allies to boost defense investments and also urged NATO members to increase defense spending in the face of growing military threats from Russia
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