The twists and turns of a turbulent week on Wall Street have made traders dizzy, but analysts are looking for a calmer ride in the coming week as the market digests the latest efforts to battle the financial market firestorm.
The mood has shifted from panic to euphoria as the financial system froze up. But some say the crisis in markets shows signs of easing.
The major US indexes ended little changed despite the unprecedented volatility.
The blue-chip Dow Jones Industrial Average fell 0.29 percent on the week to 11,388.44 after big rallies on Thursday and Friday recouped heavy losses earlier in the week.
The broad-market Standard & Poor’s 500 index rose 0.27 percent to 1,255.08 and the technology-heavy NASDAQ composite managed a gain of 0.56 percent to 2,273.90.
“I’m not sure I’ve ever seen such volatility,” said Andy Brooks, head of trading at T. Rowe Price, after one hectic back-and-forth session.
The historic week came as Wall Street giant Lehman Brothers collapsed after failing to find a buyer and the US government offered an US$85 billion lifeline to insurance giant American International Group Inc to stave off a financial market tsunami.
Meanwhile Merrill Lynch made an emergency deal to sell itself to Bank of America.
The government action failed to calm financial markets and at midweek credit markets appeared to seize up, forcing central banks to offer massive amounts of liquidity to the banking system. At one point, investors flocked to gold, oil and short-term Treasury bills in a massive flight to safety.
Amid the firestorm, the US government announced a plan described as “the mother of all bailouts” in an effort to help banks and financial firms purge their books of the so-called toxic mortgage assets stemming from the housing market collapse. The plan appeared to help skittish markets settle down.
“Wall Street appears to have turned the corner,” said Fred Dickson at DA Davidson & Co, reacting to what he called “a package designed to attack the problems at the heart of the financial crisis and reduce the general level of fear that has move moved onto Main Street.”
“While we doubt the comprehensive plan, in whatever form it finally emerges from Congress, immediately ends the housing crisis or will get the economy back on a more traditional growth track, it should provide stability to the stock market and restore confidence to the global banking system,” he said.
Bond prices were lower after sharp swings over the week.
The yield on the 10-year Treasury bond rose to 3.769 percent from to 3.730 percent a week earlier, and that on the 30-year bond increased to 4.366 percent from 4.326. Bond yields and prices move in opposite directions.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
China is deploying its largest navy fleet in regional waters in nearly three decades, posing a threat to Taiwan that is more pronounced than previous Chinese war games, the Ministry of National Defense said today. Speaking in Taipei, ministry spokesperson Sun Li-fang (孫立方) said the scale of the current Chinese naval deployment in an area running from the southern Japanese islands down into the South China Sea was the largest since China held war games around Taiwan ahead of 1996 Taiwanese presidential elections. China's military has yet to comment and has not confirmed it is carrying out any exercises. "The current scale is
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