US stocks are expected to face a volatile week as Wall Street awaits a key government jobs report expected to show unemployment at elevated levels.
The US government will release the employment report for last month on Friday, with most analysts expecting last month’s non-farm payrolls to fall by 87,000 and the unemployment rate to edge up to 9.6 percent from 9.5 percent at present.
“With a lot of expectations riding on the employment data, it would not be a surprise to see the market trade in a choppy manner leading up to its release,” analysts at Briefing.com said in a report.
Unemployment remains the biggest concern of US President Barack Obama, who is facing an uphill battle to lift the fortunes of his Democratic Party in congressional elections in November.
The latest government data on Friday showed the economic growth rate easing to 2.4 percent in the second quarter from a revised 3.7 percent in the first three months of the year, stoking fears that recovery from recession is losing steam.
Over the week, the blue-chip Dow Jones Industrial Average rose 0.4 percent to end Friday at 10,465.94.
The information technology-rich NASDAQ composite index fell 0.7 percent to 2,254.70, while the broader S&P 500 index slipped 0.1 percent to 1,101.60.
But the indexes put up a superb performance last month, with the Dow skyrocketing 7.1 percent — its heftiest monthly gain in a year, the NASDAQ index up 6.9 percent and the S&P 500 also adding 6.9 percent — its best monthly rally since July last year.
EARNINGS
Second-quarter company earnings news and economic data are expected to continue moving the market in the week ahead.
“Indicators next week will confirm that the economy started the third quarter with further diminished momentum,” IHS Global Insight economists said in a report.
Aside from the employment data, the closely followed ISM manufacturing index is expected to slide down slightly, while the ISM services index may remain unchanged for July, they said.
Construction spending is also expected to end the second quarter on a downbeat note while real consumer spending just barely chinned the bar in June.
“Recoveries going forward will likely be jobless and we will need a longer, broader based expansion before job growth accelerates sharply,” chief economist Joel Naroff of Naroff Economic Advisors said.
“It is doubtful that business and residential investment, state and local spending and inventory rebuilding will continue to be as robust as they were in the spring,” he said, forecasting third-quarter growth at below 2 percent.
RECESSION
Government revisions on previous quarter GDP data showed on Friday that the recession that struck in December 2007 was deeper than previously thought, with the worst economic contraction at 6.8 percent in the final quarter of 2008.
Obama admitted more work needs to be done, but stressed the economy was on the right path, pointing to four consecutive quarters of growth.
“Our economy is growing again instead of shrinking. And that’s a welcome sign compared to where we were,” he said on Friday.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
US president-elect Donald Trump said he would “never say” if Washington is committed to defending Taiwan from China, but “I would prefer that they do not do it [ an attack],” adding that he has a “good relationship” with Chinese President Xi Jinping (習近平). “I never say because I have to negotiate things, right?” Trump said in an interview with NBC’s Meet the Press host Kristen Welker after saying he would not reveal his incoming administration’s stance on Taiwan’s defense in the event of an attack. Asked the question again, Trump, in a reference to China, said: “I would prefer that they
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