Renewed fears on the US economic recovery have shaken confidence on Wall Street, where stocks registered a fourth straight weekly decline, leaving the market looking for a catalyst to emerge from its malaise.
In the week to Friday, market action was volatile, with the Dow Jones Industrial Average losing 0.55 percent to 10,012.23.
Action was especially tense on Friday, with the blue-chip index plunging to as low as 9,835 before snapping back to hold above the key psychological level of 10,000.
The technology-dominated NASDAQ composite slipped 0.29 percent for the week to 2,141.12 and the broad Standard & Poor’s 500 index shed 0.72 percent to 1,066.19, amid roller-coaster market action.
Several rally attempts over the past week have faltered in the wake of disappointing US economic news and growing concerns about debt problems in Greece that appear to be spreading to other eurozone members.
“You are looking at a slow upturn in the eurozone ... which makes it harder for the rest of the world to grow,” said Jay Bryson, economist at Wells Fargo.
“If this crisis becomes more generalized you may see stock markets continue to retreat, with credit markets getting tougher. In the worst case scenario we could have another downturn,” Bryson said.
Kent Engelke, chief economic strategist at Capitol Securities Management, also cited fears of faltering global growth.
“Markets are concerned about massive deficits and the perceived lack of political and social will to rein in expenditures of the PIGS countries — Portugal, Italy, Greece and Spain,” he said.
Closer to home, markets failed to take comfort from US economic data including a disappointing report showing a loss of a further 20,000 jobs last month.
The monthly US Labor Department report contained mixed signals including a drop in the unemployment rate to 9.7 percent from 10 percent in December. However, many said the job market was still far from recovery.
“Taking a big picture viewpoint, the US labor market remains fundamentally weak,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates.
“Despite the clarion calls for recovery from the legions of Wall Street economists and strategists, the reality is that labor market gaps remain very wide; here we are more than two years after the recession officially started and the ranks of the long-term unemployed continue to swell,” Rosenberg added.
Others said the crisis was not quite over yet.
“It remains clear to us that the world simply cannot emerge from the worst financial crisis in modern history without working up a sweat and shaking investors out of any complacency that develops along the way to recovery,” John Stoltzfus at Ticonderoga Securities said.
Some analysts argue that the market is undergoing a normal “correction” and would steady once the selling pressure is exhausted.
“The correcting trend continues, and now that it is into an oversold condition, we watch for signs of a bottom,” Bob Dickey at RBC Wealth Management said. “Given the rapid increase in the bearish sentiment, we are more inclined to believe the correction will end in a selling climax, potentially sparked by a news event.”
Philip Orlando, chief equity strategist at Federated Investors, said “market psychology remains decidedly fragile and negative, as we now find ourselves mired in a sharp correction.”
However, he said he anticipates a recovery fueled by low interest rates, a steadying economy, solid corporate results and the relatively cheap valuation of stocks.
Bonds were favored as a haven from the stock market turmoil. The yield on the 10-year Treasury bond fell to 3.546 percent from 3.609 percent a week earlier and that on the 30-year bond dropped to 4.493 percent from 4.510 percent.
In the coming week, the key economic data will be Thursday’s release of US retail sales figures, while more earnings reports are due, notably from Walt Disney and Coca-Cola.
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