Battered US stocks enter the New Year next week on expectations of a gradual market recovery as US president-elect Barack Obama moves to drag the world’s biggest economy out of recession.
The US stock market has risen about 20 percent from its climactic lows reached on Nov. 21 and “chances that we saw the bottom of the bear have increased because of the massive easing done by the Federal Reserve since then,” said Alfred Goldman, chief market strategist at Wachovia Securities.
The Fed had vowed to do whatever it takes to help the economy and the credit markets, as it slashed interest rates to virtually zero two weeks ago to jumpstart the economy from the worst slump since the Great Depression.
Goldman said stock valuation levels were “very attractive” and “the risk of a depression is extremely unlikely,” forecasting the recession may end next summer.
“We do know that 2009 will bring a new slate of ideas from a very popular president-elect,” he said ahead of Obama’s inauguration on Jan. 20 and the prospect of a massive stimulus package by his new administration.
Amid the current gloom of job and spending cuts as well as a credit squeeze, “the seeds are being sown for a modest recovery that we are forecasting to begin in mid-2009,” said Stephen Auth of Federated Investors.
“The prospect for eventual better times has led us to raise slightly the risk profile of our model stock-bond portfolio to capitalize on opportunities that arise in the months after the economy bottoms,” he said.
In the week to Friday, the Dow Jones Industrial Average, Wall Street’s benchmark index, fell 0.74 percent to 8,515.55 following a 0.59 percent drop the previous week.
The tech-studded NASDAQ shed 2.17 percent to 1,530.24 while the broad-market Standard and Poor’s 500 was down 1.69 percent to 872.80.
The stock decline stemmed from weak data on the ailing housing sector, and concerns over the fate of struggling automakers as well as plunging corporate earnings and retail sales as well as deteriorating US commercial property values.
“The underpinnings of the markets continue to improve, but it is still too early to say that the worst is finally over,” said Paul Nolte, director of investments at Hinsdale Associates.
“Our best guess at this point is that we rally a bit early in the New Year as investors wish 2008 good riddance,” he said.
However, he cautioned that once the likelihood of a still weak economy persisted into the second quarter, the market could visit old lows during the first half to eight months of the year.
“We are expecting that the second half of the year is not only good for the market ... and the economy should also begin to improve,” he said. The bond market, which had greatly benefited from the financial and economic uncertainty, fell the past week.
The 10-year Treasury bond yield rose to 2.137 percent from 2.131 percent the previous week and that on the 30-year Treasury bond was up to 2.613 percent from 2.562 percent.
Bond yields and prices move in opposite directions.
Tropical Storm Usagi strengthened to a typhoon yesterday morning and remains on track to brush past southeastern Taiwan from tomorrow to Sunday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, the storm was approximately 950km east-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, the CWA said. It is expected to enter the Bashi Channel and then turn north, moving into waters southeast of Taiwan, it said. The agency said it could issue a sea warning in the early hours of today and a land warning in the afternoon. As of 2pm yesterday, the storm was moving at
UPDATED FORECAST: The warning covered areas of Pingtung County and Hengchun Peninsula, while a sea warning covering the southern Taiwan Strait was amended The Central Weather Administration (CWA) at 5:30pm yesterday issued a land warning for Typhoon Usagi as the storm approached Taiwan from the south after passing over the Philippines. As of 5pm, Usagi was 420km south-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost tip, with an average radius of 150km, the CWA said. The land warning covered areas of Pingtung County and the Hengchun Peninsula (恆春), and came with an amended sea warning, updating a warning issued yesterday morning to cover the southern part of the Taiwan Strait. No local governments had announced any class or office closures as of press time last night. The typhoon
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,”
At least 35 people were killed and dozens more injured when a man plowed his car into pedestrians exercising around a sports center in the southern Chinese city of Zhuhai on Monday night. Footage showing bodies lying on the pavement appeared on social media in the hours after the crash, but had vanished by early Tuesday morning, and local police reported only “injuries.” It took officials nearly 24 hours to reveal that dozens had died — in one of the country’s deadliest incidents in years. China heavily monitors social media platforms, where it is common for words and topics deemed
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