Wall Street returns from vacation season to enter what is historically the most perilous period of the year amid conflicting signals on the US’ economic outlook.
Trade over the past week was choppy as investors reacted to various data that pointed toward both economic weakness and strength.
In the week to Friday, the blue-chip Dow Jones Industrial Average gave back 0.72 percent to finish the week at 11,543.96.
The broad-market Standard & Poor’s 500 index lost 0.73 percent to 1,282.83 and the technology-heavy NASDAQ composite shed 1.95 percent to 2,367.52.
The main indexes closed lower for the week but held onto gains for a strong August. The Dow rose 1.92 percent, the NASDAQ 2.44 percent and S&P index 1.78 percent in the month.
The market was set to reopen on Tuesday after the Labor Day holiday, commencing what is traditionally a treacherous month.
“Many investors believe October is the worst month for equity market returns. This can be partly attributable to the fact some large one-day declines have occurred in October,” said David Templeton of the financial Web site Seeking Alpha.
“In actuality though, the worst month for market returns is September. Although the average return in September is negative, the magnitude of the decline was no worse than one to 1.5 percent,” he said.
Cross-currents affecting the market in recent weeks included up-and-down economic data and volatile oil prices.
News that US GDP expanded by a stronger-than-expected 3.3 percent in the second quarter was offset by data showing a weak 0.2 percent gain in July consumer spending and a 0.7 percent drop in incomes.
The conflicting figures have economists in a heated debate over what to believe.
“The economy is weaker than the GDP data might suggest and is not expected to repeat the growth of the first half,” Ryan Sweet at Economy.com said. “Risks of another contraction in real GDP will remain elevated through the first half of 2009 as labor and housing markets search for their bottoms.”
Ethan Harris, economist at Lehman Brothers, said the economy has managed to be resilient in the face of numerous shocks.
“In the face of gale force winds from the housing, credit and commodity markets, the economy continues to bend, but not break,” he said.
In the coming week, the market will digest reports on monthly sales from automakers, expected to underscore consumer malaise as well as weakness in the manufacturing sector.
“We saw a slight improvement [in auto sales] in July, but don’t expect to see a major recovery for the remainder of the year,” Jesse Toprak of research firm Edmunds.com said.
Also on tap is a report Friday on US payrolls, which have been shrinking since the start of the year.
The monthly payrolls figures “have spelled recession, other indicators not, a divergence that should continue in the week ahead,” said Avery Shenfeld, economist at CIBC World Markets.
Wells Fargo economist Eugenio Aleman said inflation is another concern for the market. One government report on Friday showed the yearly inflation pace was running at a hefty 4.5 percent.
“While economic growth seems to be in the minds of everybody, I still worry about inflation,” he said. “The trend is clearly upwards and will continue to remain on that path if the Federal Reserve continues to be as irresponsible as it has been until now.”
Bond prices firmed in the past week. The yield on the 10-year Treasury bond declined to 3.813 percent from 3.867 percent a week earlier, while that on the 30-year bond eased to 4.412 percent against 4.463 percent.
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
SILICON VALLEY HUB: The office would showcase Taiwan’s strengths in semiconductors and artificial intelligence, and help Taiwanese start-ups connect with global opportunities Taiwan has established an office in Palo Alto, one of the principal cities of Silicon Valley in California, aimed at helping Taiwanese technology start-ups gain global visibility, the National Development Council said yesterday. The “Startup Island Taiwan Silicon Valley hub” at No. 299 California Avenue is focused on “supporting start-ups and innovators by providing professional consulting, co-working spaces, and community platforms,” the council said in a post on its Web site. The office is the second overseas start-up hub established by the council, after a similar site was set up in Tokyo in September last year. Representatives from Taiwanese start-ups, local businesses and
‘DETERRENT’: US national security adviser-designate Mike Waltz said that he wants to speed up deliveries of weapons purchased by Taiwan to deter threats from China US president-elect Donald Trump’s nominee for US secretary of defense, Pete Hegseth, affirmed his commitment to peace in the Taiwan Strait during his confirmation hearing in Washington on Tuesday. Hegseth called China “the most comprehensive and serious challenge to US national security” and said that he would aim to limit Beijing’s expansion in the Indo-Pacific region, Voice of America reported. He would also adhere to long-standing policies to prevent miscalculations, Hegseth added. The US Senate Armed Services Committee hearing was the first for a nominee of Trump’s incoming Cabinet, and questions mostly focused on whether he was fit for the
RSS