Wall Street is wilting in the summer heat, with investors increasingly uncertain about an economic and earnings recovery any time soon.
More caution is likely in the coming week with a wave of earnings reports expected that may offer hints on corporate expectations for recovery from recession.
In the week to Friday, the Dow Jones Industrial Average declined 1.62 percent to 8,146.52 and the broad-market Standard & Poor’s 500 index lost 1.93 percent to 879.13, marking four consecutive losing weeks for those indexes.
The technology-heavy NASDAQ dropped 2.25 percent over the week to 1,756.03.
Ahead of the opening, the US government said the US trade deficit narrowed sharply in May to its lowest level in nearly a decade, led by a plunge in imported oil.
The deficit fell nearly 10 percent in May to a seasonally adjusted US$26 billion, the lowest level since November 1999. The news appeared moderately positive for the US economy, but also reflected weak global trade flows.
Al Goldman, chief market strategist at Wells Fargo Advisors, said the market remains in a “correction-consolidation” phase within a trading range.
“The correction is doing what corrections do — increasing fear and frustration, decreasing glee and bullishness,” he said.
The economic outlook “has most folks confused,” Goldman said. “We believe the data suggests that the end of the recession is near — that’s the good news for investors. However, the data also appears to indicate, as we have been saying for a month, that a strong economy is not just around the corner.”
Similar views come from Stephen Auth, chief investment officer at Federated Investments.
“Our view is that an economic recovery has in fact begun, and that a second or third dip, depending on how you count the waves we’ve had since the recession began ... is unlikely but not impossible,” Auth said.
“This forecast suggests that the outlook for returns on financial assets will likely be muted, and specifically that stocks are unlikely to return to their old highs any time soon. This said, off current low levels, we do believe that the best returns investors can hope for over the next 12 to 18 months are likely to come from stocks, even if the pattern of getting there may be erratic,” he said.
Auth said the S&P 500 was likely to drift toward the 1,000 level, some 15 percent above current levels, and that “the downside is ‘protected’ by the promise of continued government economic stimulus.”
David Rosenberg, chief economist and strategist at Gluskin Sheff, warned that stock investors should not look for strong gains simply based on a forecast of an end to recession, arguing that a “sustainable expansion” is needed.
“If the lesson from the 2000-2002 cycle is any indication, calling for the recession to end is basically irrelevant,” Rosenberg said. “What matters is that the recession’s end gives way to a vigorous expansion.”
Bonds strengthened. The yield on the 10-year Treasury note fell to 3.413 percent from 3.495 percent a week earlier and that on the 30-year bond eased to 4.201 percent from 4.317 percent.
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
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
Typhoon Usagi yesterday had weakened into a tropical storm, but a land warning issued by the Central Weather Administration (CWA) was still in effect in four areas in southern Taiwan. As of 5pm yesterday, Tropical Storm Usagi was over waters 120km south-southwest of Oluanpi (鵝鑾鼻), the southernmost tip of Taiwan proper, and was moving north at 9kph, CWA data showed. The storm was expected to veer northeast later yesterday. It had maximum sustained winds of 101kph, with gusts of up to 126kph, the data showed. The CWA urged residents of Kaohsiung, Pingtung County, Taitung County and the Hengchun Peninsula (恆春) to remain alert to
RSS