Is it game over for the recession? Or will consumers stay in hibernation?
Investors will watch next week’s new home sales and consumer data to see if the economy’s recovery is on track and whether US stocks — now at highs for this year — will extend their rally.
On Friday, Wall Street got more confirmation that the economy is on the mend with a report showing existing home sales last month rose 7.2 percent — the fastest pace in nearly two years and a sign that housing is pulling out of a three-year slump. The data, combined with stronger-than-expected second-quarter earnings, pushed the Standard & Poor’s 500 and the NASDAQ to the highest levels since last October.
So the report on new home sales for last month, due on Wednesday, is likely to get more scrutiny than usual from investors who want proof that the rally has been driven by more than hope for an economic turnaround.
“What we’ve seen so far has been data signaling that it’s the end of the recession,” said Kevin Caron, market strategist at Stifel, Nicolaus & Co in Florham Park, New Jersey.
Other major indicators on the upcoming week’s economic calendar include consumer confidence, durable goods orders, GDP, personal income and consumption, and consumer sentiment.
For the week, the Dow Jones industrial average ended up 2 percent, the S&P 500 gained 2.2 percent and the NASDAQ climbed 1.8 percent. The S&P 500 is up 51.7 percent from its 12-year closing low set on March 9.
Stronger-than-expected second-quarter earnings have helped bolster stocks over recent weeks. The S&P 500 is up about 11 percent since July 1.
Single-family home prices for June, due from the Standard & Poor’s/Case-Shiller home price index on Tuesday, are forecast to rise 0.2 percent, which would confirm May’s surprising turnaround.
New home sales in July are expected to rise to an annual rate of 390,000 units, according to Thomson Reuters data. June’s new home sales came in at an annual rate of 384,000 unites. Coupled with Friday’s better-than-expected existing home sales figures, optimism about the housing market could continue stocks’ advance.
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.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
COORDINATION, ASSURANCE: Separately, representatives reintroduced a bill that asks the state department to review guidelines on how the US engages with Taiwan US senators on Tuesday introduced the Taiwan travel and tourism coordination act, which they said would bolster bilateral travel and cooperation. The bill, proposed by US senators Marsha Blackburn and Brian Schatz, seeks to establish “robust security screenings for those traveling to the US from Asia, open new markets for American industry, and strengthen the economic partnership between the US and Taiwan,” they said in a statement. “Travel and tourism play a crucial role in a nation’s economic security,” but Taiwan faces “pressure and coercion from the Chinese Communist Party [CCP]” in this sector, the statement said. As Taiwan is a “vital trading
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