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.
The Thai government on Friday announced that Taiwanese would be allowed to stay in the country for up to 60 days per entry, under the Southeast Asian country’s visa-free program starting from today. Taiwan is among 93 countries included in the Thai visa-waiver program, which has been expanded from 57 countries, with the visa-exempt entry extended from 30 to 60 days. After taking office last year, Thai Prime Minister Srettha Thavisin has vowed to grant more visa waivers to foreign travelers as part of efforts to stimulate tourism. The expanded visa-waiver program was on Friday signed by Thai Minister of the Interior Anutin
CHIPS AND DEFENSE: Trump said the US had lost its chip business and Taipei should pay it for defense, and added that ‘we’re no different than an insurance company’ Taiwan-US relations are solid, and both sides are in agreement that peace and stability in the Taiwan Strait and the Indo-Pacific region are everyone’s concern, Premier Cho Jung-tai (卓榮泰) said yesterday following comments by former US president Donald Trump that Taiwan “should pay” for US defense. Taiwan is thankful to the US for supporting Taiwan’s bid to participate in international organizations, Cho told a news conference in Taipei. “I know the people very well, respect them greatly. They did take about 100 percent of our chip business,” Trump told Bloomberg on June 25 in an interview that was published on Tuesday. “I think
SECURITY CONCERNS: An FBI agent said it was surprising that the shooter, whose motive remains unknown, was able to open fire before the Secret Service killed him On the heels of an apparent attempt to kill him, former US president Donald Trump yesterday called for unity and resilience as shocked leaders across the political divide recoiled from the shooting that left him injured, but “fine,” and the shooter and a rally-goer dead. The presumptive Republican presidential nominee said the upper part of his right ear was pierced in the shooting His aides said he was in “great spirits” and doing well. “I knew immediately that something was wrong in that I heard a whizzing sound, shots, and immediately felt the bullet ripping through the skin. Much bleeding took place,” he
FRONTLINE DEFENDERS: While air defense forces were placed on alert, Lai visited the navy’s 131st Fleet in Keelung, calling it a vital pillar in the nation’s defense The Ministry of National Defense yesterday said it was monitoring “waves” of missile tests in China’s Inner Mongolia and that its air defense forces were on alert. From 4am yesterday, the ministry detected “multiple waves of test launches” by the Chinese People’s Liberation Army (PLA) Rocket Force in Inner Mongolia, about 2,000km from Taiwan, it said. The military are continuously monitoring developments and the air defense forces are on alert, the ministry said, without giving details. The Chinese Ministry of National Defense did not answer calls seeking comment outside of office hours. The Rocket Force is in charge of China’s conventional and nuclear