US stocks may have started the New Year with a bang, but experts see major headwinds for the market as the new administration of US president-elect Barack Obama moves rapidly to eject the economy from prolonged recession.
All three key stock indices shot up at least 6 percent in the week to Friday as investors banked on Obama, who takes over from US President George W. Bush on Jan. 20, to push ahead with a mammoth plan to stimulate growth in the world’s largest economy.
“Mr Obama’s stimulus plan will be a major focal point for the market in January,” Patrick O’Hare of Briefing.com said.
“No one knows for certain right now what it will end up looking like, but one thing is certain at this point: it will be big in terms of its cost,” he said.
Obama is scheduled to meet lawmakers tomorrow to finalize an infrastructure-based stimulus package that media reports say ranges from US$850 billion to US$1 trillion in a bid to pump prime the US economy, reeling from its worst crisis since the Great Depression.
Nigel Gault, chief economist at IHS Global Insight, cautioned that any stimulus plan based on spending to boost infrastructure would take time to revitalize the economy.
“But how quickly can the funds actually be spent?” he asked. “Infrastructure spending is a key part of the package, and it cannot be turned on and off like a faucet. We assume that the funds will take much longer than two years to spend out.”
But Gault said that combined with the Federal Reserve’s vigorous easing of interest rates, the stimulus package should help stabilize the economy in the second half of this year and promote some recovery during next year.
The Dow Jones Industrial Average surged a hefty 6.09 percent for the holiday-shortened week to finish Friday at 9,034.69, its highest close since Nov. 5.
The tech-studded NASDAQ leapt 6.66 percent to 1,632.21 and the broad-market Standard & Poor’s 500 index advanced 6.75 percent to 931.80 for the week.
Experts cautioned that the advances of the key indices came amid very low trading volume as many investors were still on holiday.
Only twice in the past seven sessions has trading volume on the New York Stock Exchange exceeded 1 billion shares.
Trading in the week ahead could be dictated by a series of new economic data to be released, including last month’s vehicle and retail sales figures and the widely watched employment report for the month, experts said. Economists expect that the US shed jobs for the 12th straight month last month while investors will closely watch to see if holiday retail sales were as poor as some retailers had suggested.
The number of companies to announce their quarterly earnings results will also start to pick up the coming week.
“Next week’s indicators will constitute yet another stark reminder of how forces in the economy reached maximum negative amplitude at the end of 2008,” analysts at Global Insight said in a report.
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 2.416 percent from 2.137 percent the previous week and that on the 30-year Treasury bond was up to 2.815 percent from 2.613 percent.
Bond yields and prices move in opposite directions.
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat
RSS