The inflation dragon that many thought had been slain is coming back to haunt Wall Street, which is struggling with a new scenario of higher oil prices, rising interest rates and political uncertainty.
The blue-chip Dow Jones Industrial Average fell 1.03 percent to 10,012.87 during the week ending Friday while the broad-market Standard & Poor's 500 index dipped 0.28 percent to 1,095.70.
The technology-heavy NASDAQ composite shed by 0.71 percent for the week to 1,904.25.
A record high in crude oil prices has roiled investors already fearing a resurgence of inflation, which showed signs of returning to the forefront over the past week at the wholesale and consumer level.
The government said consumer prices rose a modest 0.2 percent in April with core prices, stripping out energy and food, up 0.3 percent.
More worrying, core prices were up 1.8 percent in April compared to last year, following year-on increases of 1.2 percent in February and 1.6 percent in March.
Meanwhile wholesale prices were up 0.7 percent, the biggest rise since March last year, led by sharp rises in energy and food costs.
While investors have already been girding for a Federal Reserve move to bring interest rates off their super-low levels, the recent data seem to be suggesting the Fed may have misread the inflation signals and must now act more aggressively that anticipated.
"Price increases are heating up at an alarming rate," said John Silvia at Wachovia Securities.
"The Fed and most forecasters missed the mark on inflation so badly because they failed to appreciate how much and how broadly final demand has accelerated."
"Fed officials have been trying to convince the market that they will be raising rates `at a measured pace,' but the market sees a replay of 1994 when the Fed raised the funds rate by 300 basis points in 12 months," said David Rosenberg at Merrill Lynch.
"The debate over Fed tightening has shifted from `when' to `how much' and `how quickly?'"
Technical analyst Ralph Acampora at Prudential Securities said the market is having a hard time casting off its nerves.
"The recent equity environment seems to be running to script as the market attempts to recoup after the broad-based selling barrage of last week," he said.
"Unfortunately, the three days of stabilization that we have seen through yesterday's session have lacked upside conviction ... We continue to maintain a very selective and defensive posture."
"I think the market is trying to stabilize," said Peter Cardillo at SW Bach. "The Fed needs to take a pre-emptive strike so that the market can focus on earnings and good economic numbers."
Rod Smyth at Wachovia Securities notes that despite a robust economy and corporate earnings, stocks have held back.
"The stock market is a discounting mechanism and is always looking into the future. Thus stocks tend to do best when when investors expect economic acceleration -- for example a year ago," he said.
"Looking forward from today, investors are dealing with the prospect of higher interest rates, persistently high energy prices and political uncertainty. In our opinion these are the reasons why the stock market has been unable to rise above its first quarter highs."
Alfred Goldman at AG Edwards said the market is suffering from uncertainty.
"The market can't make up its mind. Is it a bull or a bear? Does it have horns or claws?" he said.
"That's enough confusion to cause those of us who have to analyze the beast a great deal of heartburn and sleepless nights Higher rates will slow the economy down a bit, but that is exactly what the Fed wants and something investors should welcome. Unfortunately, the negative side of our split personality market says the opposite."
The heightened inflation fears also roiled the bond market. The yield on the 10-year US Treasury bond jumped to 4.788 percent from 4.766 percent a week earlier and that on the 30-year bond to 5.503 percent from 5.464 percent. Bond yields and prices move in opposite directions.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
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],”