Wall Street enters the year-end holiday season this coming week with little to cheer about as the worst bear market in decades appears to be grinding on.
While some say stocks have been beaten down to cheap levels, investors remain fearful that the worst is not yet over, fretting over a possible collapse of the US auto industry or more troubles for major banks.
As a result, the cheer normally expected with the US Thanksgiving Day holiday on Thursday that traditionally opens the year-end holiday is noticeably absent.
The Dow Jones Industrial Average and NASDAQ hit their lowest levels in more than five years in the past week and the broad-market Standard & Poor’s 500 fell to its weakest since 1997.
Although the market ended Friday on a high note, with a big rally inspired by news that US president-elect Barack Obama had chosen New York Federal Reserve president Timothy Geithner as Treasury secretary, the losses for the week were still staggering.
In the week to Friday, Dow index tumbled 5.31 percent to 8,046.42. The tech-heavy NASDAQ sank 8.74 percent to 1,384.35 and the broad-market Standard & Poor’s 500 dropped 8.39 percent to 800.03.
The past week was filled with glum economic news. US unemployment claims surged to a 16-year high while housing starts fell to the lowest levels on record.
Consumer prices fell at a steep rate, raising worries about deflation, while the Federal Reserve slashed its economic outlook, acknowledging a likely recession well into next year.
Citigroup shares plunged by some 50 percent, raising fears about the survival of one the US banking titans, and an anticipated bailout of the US auto sector was postponed in Congress, raising the specter of collapse.
Yves Smith, analyst with the financial Web site Naked Capitalism, said a collapse of General Motors (GM) would be “a disaster of colossal proportions.”
“GM would be a massive bankruptcy. It is doubtful whether it could obtain enough [debtor] financing, which means it might be forced into a partial, perhaps a full liquidation. The ramifications are nightmarish,” Smith said.
The stock market reflected those worries.
“Stocks are down roughly 50 percent from their highs in the US, Canada and Europe, representing the worst bear market in the postwar period,” said Sherry Cooper, chief economist at BMO Capital Markets.
In a sign of the panic in the past week, the bond market soared to historic highs.
The yield on the 10-year Treasury bond fell to 3.167 percent from 3.750 percent a week earlier, and then the 30-year Treasury bond tumbled to 3.663 percent against 4.230 percent. The lower yields reflect higher bond prices.
TECH EFFECT: While Chiayi County was the oldest region in the nation, Hsinchu county and city, home of the nation’s chip industry, were the youngest, the report showed Seven of the nation’s administrative regions, encompassing 57.2 percent of Taiwan’s townships and villages, became “super-aged societies” in June, the Ministry of the Interior said in its latest report. A region is considered super-aged if 20 percent of the population is aged 65 or older. The ministry report showed that Taiwan had 4,391,744 people aged 65 or older as of June, representing 18.76 percent of the total population and an increase of 1,024,425 people compared with August 2018. In June, the nation’s elderly dependency ratio was 27.3 senior citizens per 100 working-aged people, an increase of 7.39 people over August 2018, it said. That
‘UNITED FRONT’: The married couple allegedly produced talk show videos for platforms such as Facebook and YouTube to influence Taiwan’s politics A husband and wife affiliated with the China Unification Promotion Party (CUPP) were indicted yesterday for allegedly receiving NT$74 million (US$2.32 million) from China to make radio and digital media propaganda to promote the Chinese government’s political agenda and influence the outcome of Taiwan’s elections. Chang Meng-chung (張孟崇) and his wife, Hung Wen-ting (洪文婷), allegedly received a total of NT$74 million from China between 2021 and last year to promote candidates favored by Beijing, contravening the Anti-Infiltration Act (反滲透法) and election laws, the Chiayi District Prosecutors’ Office said. The couple acted as Beijing’s propaganda mouthpiece by disparaging Hong Kong democracy activists
EARLY ARRIVALS: The first sets of HIMARS purchased from the US arrived ahead of their scheduled delivery, with troops already training on the platforms, a source said The Ministry of National Defense (MND) yesterday said it spotted 35 Chinese military aircraft, including fighters and bombers, flying to the south of Taiwan proper on the way to exercises in the Pacific, a second consecutive day it has reported such activities. The Chinese Ministry of National Defense did not respond to a request for comment on the missions, reported just days before tomorrow’s US presidential election. The US is bound by law to provide Taiwan with the means to defend itself. Its arms sales to Taipei include a US$2 billion missile system announced last month. The MND said that from 9am yesterday,
A Control Yuan member yesterday said he would initiate an investigation into why the number of foreign nationals injured or killed in traffic incidents has nearly doubled in the past few years, and whether government agencies’ mechanisms were ineffective in ensuring road safety. Control Yuan member Yeh Ta-hua (葉大華) said in a news release that Taiwan has been described as a “living hell for pedestrians” and traffic safety has become an important national security issue. According to a National Audit Office report released last year, more than 780,000 foreign nationals were legally residing in Taiwan in 2019, which grew to more than