Investors reeling from a roller-coaster ride face a shortened trading week that is expected to see light trade and modest portfolio adjustments ahead of the New Year.
But analysts do not rule out a modest year-end rally to brighten up the mood in the US amid the financial turmoil.
“Right now, most traders are straining to see if Santa Claus shows up on Wall Street, as he normally does just ahead of Christmas, bringing a modest year-end rally,” DA Davidson & Co chief market strategist Frederic Dickson said.
“Looking ahead to next week, trading activity should lighten up as many on Wall Street begin to take extended year-end holiday vacations,” he said, citing possible cessation of selling pressure from year-end tax-loss selling and hedge fund redemptions.
“The professionals are deserting the ship today and they will leave instructions with their seconds in command not to take any big positions on either side,” Raymond James Equities strategist Jeff Stau said on Friday.
The market may react to updated numbers on the dwindling housing market and third-quarter GDP growth to be released by the government the coming week, Dickson said.
The market could also get a year-end boost if the US Treasury takes action to bring down home mortgage rates as expected.
“Stocks could head higher over the few remaining days of 2008 if the Treasury unveils a so-called Home Recovery Plan to lower mortgage rates and the Fed pegs the 10-year Treasury bond yield at 2 percent to facilitate this plan,” Ed Yardeni of Yardeni Research said.
“Then again, there have been so many rescue plans and liquidity facilities coming out of Washington over the past year that investors have become totally jaded about them,” he said.
In the week to Friday, the Dow Jones Industrial Average fell 0.59 percent to 8,579.11 following a 2.19 percent drop in the prior week.
The tech-studded NASDAQ rose 1.53 percent to 1,564.32, while the broad-market Standard and Poor’s 500 was up 0.93 percent to 887.88.
The market opened the week with a mild drop on Monday, but the next day saw a massive rally on the back of an interest rate cut to nearly zero by the US Federal Reserve.
But the gains were virtually wiped out the next two days, largely as a result of a plunge in oil prices that hurt Exxon Mobil and other energy firms and a lowering by Standard and Poor’s of industrial giant General Electric’s credit outlook to negative.
Despite an early rally on Friday sparked by a US$13.4 billion government rescue of General Motors and Chrysler, share prices eased at the end of trading week on concerns that the deal could unravel.
Al Goldman at Wachovia Securities said the rally “ran out of fuel quickly as the market took a second look at the plan.”
He said the market pulled back after the United Auto Workers union “served notice it will fight to change terms which it says unfairly single out workers.”
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
‘SOMETHING SPECIAL’: Donald Trump vowed to reward his supporters, while President William Lai said he was confident the Taiwan-US partnership would continue Donald Trump was elected the 47th president of the US early yesterday morning, an extraordinary comeback for a former president who was convicted of felony charges and survived two assassination attempts. With a win in Wisconsin, Trump cleared the 270 electoral votes needed to clinch the presidency. As of press time last night, The Associated Press had Trump on 277 electoral college votes to 224 for US Vice President Kamala Harris, the Democratic Party’s nominee, with Alaska, Arizona, Maine, Michigan and Nevada yet to finalize results. He had 71,289,216 votes nationwide, or 51 percent, while Harris had 66,360,324 (47.5 percent). “We’ve been through so
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