Wall Street’s stunning two-month rally has stalled, with investors turning cautious about prospects for an early recovery from recession in the face of sluggish economic data.
The Dow Jones Industrial Average retreated 3.57 percent in the week to Friday to 8.268.64, ending a string of gains over eight of the previous nine weeks.
The tech-dominated NASDAQ shed 3.38 percent to 1,680.14 while broad-market Standard & Poor’s 500 index tumbled 4.99 percent in the week to 882.88.
While the broad US market remains up by some 30 percent from lows hit in early March, some investors are now questioning whether the rally has gone too far too fast in view of still-questionable economic news.
“Investors just don’t believe in this rally,” said Linda Duessel, equity strategist at Federated Investors. “A sustainable rally needs a reality check. We’ve been saying this rally moved too far, too fast and could use a breather. This week, it got it.”
The market was disappointed by reports over the past week showing a surprise 0.4 percent drop in US retail sales, suggesting American consumers are not yet ready to resume their spending ways in view of ongoing job losses.
“Investors were reminded this week that ‘less-bad’ doesn’t necessarily mean good,” said Sal Guatieri, economist at BMO Capital Markets. “American consumers, though emerging from their deep hibernation of late last year, are still hunkering down.”
Ed Yardeni at Yardeni Research said the market was starting to question the notion of “green shoots” that will lead to an economic recovery.
“We all want to believe that a recovery is coming. So maybe we are imagining one,” he said.
A number of reports in the past week suggested sluggish conditions, but some argue that the easing of the downturn may presage a recovery sometime soon.
“The fact that we have started seeing the silver linings in some very dark clouds tells me psychology is changing dramatically,” Joel Naroff of Naroff Economic Advisors said.
“Worries about a never-ending recession have been replaced by hopes that better times are near. Because I have been arguing that confidence is the key to ending the recession, the upswing in outlook is the most optimistic development that could have occurred,” he said.
Bonds rebounded over the past week as investors looked for safety. The yield on the 10-year US Treasury bond eased to 3.123 percent from 3.293 percent a week earlier and that on the 30-year bond dropped to 4.083 percent from 4.274 percent. Bond yields and prices move in opposite directions.
STILL COMMITTED: The US opposes any forced change to the ‘status quo’ in the Strait, but also does not seek conflict, US Secretary of State Marco Rubio said US President Donald Trump’s administration released US$5.3 billion in previously frozen foreign aid, including US$870 million in security exemptions for programs in Taiwan, a list of exemptions reviewed by Reuters showed. Trump ordered a 90-day pause on foreign aid shortly after taking office on Jan. 20, halting funding for everything from programs that fight starvation and deadly diseases to providing shelters for millions of displaced people across the globe. US Secretary of State Marco Rubio, who has said that all foreign assistance must align with Trump’s “America First” priorities, issued waivers late last month on military aid to Israel and Egypt, the
France’s nuclear-powered aircraft carrier and accompanying warships were in the Philippines yesterday after holding combat drills with Philippine forces in the disputed South China Sea in a show of firepower that would likely antagonize China. The Charles de Gaulle on Friday docked at Subic Bay, a former US naval base northwest of Manila, for a break after more than two months of deployment in the Indo-Pacific region. The French carrier engaged with security allies for contingency readiness and to promote regional security, including with Philippine forces, navy ships and fighter jets. They held anti-submarine warfare drills and aerial combat training on Friday in
COMBAT READINESS: The military is reviewing weaponry, personnel resources, and mobilization and recovery forces to adjust defense strategies, the defense minister said The military has released a photograph of Minister of National Defense Wellington Koo (顧立雄) appearing to sit beside a US general during the annual Han Kuang military exercises on Friday last week in a historic first. In the photo, Koo, who was presiding over the drills with high-level officers, appears to be sitting next to US Marine Corps Major General Jay Bargeron, the director of strategic planning and policy of the US Indo-Pacific Command, although only Bargeron’s name tag is visible in the seat as “J5 Maj General.” It is the first time the military has released a photo of an active
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
RSS