US stocks fell for the second week in three as companies including JC Penney & Co and RF Micro Devices Inc. said results would be less than forecast.
Investors trying to predict profits "are having to take their guesstimates down," said Charles White, who helps manage US$2 billion at Avatar Associates. The S&P 500 is stuck below 880 and "this is ground we have trampled on for a long time. There doesn't seem to be a real defined reason to bust out of that level."
The Standard & Poor's 500 Index fell 1.2 percent to 868.30 for the week, giving it a loss for the year of 1.3 percent. The Dow Jones Industrial Average dropped 0.9 percent to 8,203.41 and the NASDAQ Composite Index fell 1.8 percent to 1,358.85.
Companies will report first-quarter earnings over the next few weeks. Profit for the S&P 500's members probably rose 8.3 percent, based on the average analyst forecast compiled by Thomson Financial. That's down from 11.7 percent at the beginning of the year and 17 percent on Oct. 1.
Goodyear Tire & Rubber Co. fell 18 percent, the biggest decline in the S&P 500. North America's largest tiremaker reported its fourth-quarter loss widened because the company wrote the down the value of tax credits by US$1.1 billion.
US Steel Corp had the index's biggest gain, rising 12 percent. It said it would cut 5,700 jobs, or about 20 percent of the workforce of the combined companies, if it wins a bid for bankrupt National Steel Corp over rival AK Steel Holdings Corp.
Stocks had rallied beginning March 12, the week before allied forces attacked Iraq. Benchmark indexes rose last week as coalition forces closed in on Baghdad and some Republican Guard forces surrendered, easing concerns about a prolonged war.
JC Penney lost 12 percent to US$17.89 for the week. The No. 2 US department-store chain said this quarter's profit will decline from a year earlier because March sales fell more than expected at its department stores and Eckerd drugstore chain.
RF Micro Devices, a maker of mobile-phone chips, sank 14 percent to US$5.14. Sales have been hurt by the war and by a shift to less-profitable components, the company said.
AT&T posted the biggest loss in the Dow, falling 7 percent to US$14.05. The biggest US long-distance telephone company is eliminating some management jobs and combining departments in an attempt to cut costs and improve customer service.
Altria Group Inc and McDonalds Corp had the biggest gains in the Dow this week.
McDonald's rose 8.5 percent to US$15.78. The world's largest restaurant chain said it will raise its dividend, buy back some shares, and pay down as much as US$700 million in debt this year.
The chain also will trim capital spending by 40 percent to US$1.2 billion.
Altria, the parent of the world's largest cigarette maker, rose 8 percent to US$30.59. An Illinois judge is considering alternatives to the US$12 billion bond the company must post in order to appeal a US$10 billion damage verdict. Altria's Philip Morris USA unit told the judge the bond may bankrupt the company.
The judge, Nicholas Byron, said he's making progress in reaching a compromise.
Some investors say they're not convinced the economy is rebounding. Avatar's White dismissed Friday's bigger-than-forecast jump in retail sales, attributing it to auto dealer promotions. While consumer confidence jumped in April, it was rebounding from a nine-year low last month as the war in Iraq wound down, he said.
Even with the conclusion of the Iraq war, there's still the potential for strife in the Middle East, he said.
"We're getting a bounce from the distressed levels of February," said White. "We still don't know the direction of the economy. There's economic uncertainty and geopolitical uncertainty."
The S&P 500 is up 8 percent since March 11, when stocks started rallying in anticipation of a quick victory in Iraq. The index is down 3 percent since March 21 when the rally peaked.
Investors have been trying to explain the volatility. The Dow rose as much as 126 points in the first 20 minutes of trading on Friday, before drifting lower. Value Line Asset Management money manager Brad Brooks blames the prevalence of computer-assisted trading of stocks. In one type of so-called program trading, buy and sell decisions are triggered automatically by fluctuations in So-called program trading accounted for 41 percent of New York Stock Exchange volume last week, according to the last NYSE statistics, up from 19 percent three years ago.
"The average investor is holding back," said Brooks, who manages US$600 million. "And program traders are so technically oriented."
Viren Chandrasoma, Credit Suisse First Boston's director of program trading, said while a large computer-generated trade can move the market, stocks generally fall because there are few investors willing to bid prices higher. Monday and Tuesday the S&P 500 closed within two points of 880, and has closed above the milestone only once since January. While Chandrasoma doesn't subscribe to technical analysis, which involves studying trends on stock charts to predict prices, he has noted the pattern.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day