Newly optimistic investors sent stocks sharply higher on Friday, propelling the Dow Jones industrials 112 points higher, as new economic data showed strength in manufacturing and the departure of PeopleSoft Inc's chief executive raised hopes for a merger in the tech sector. The major indexes closed the week with respectable gains.
With the Institute for Supply Management's manufacturing index posting the 16th straight month of growth in that sector, investors' faith in the economic recovery was renewed. Strong increases in construction spending also improved the mood on Wall Street.
Oil prices could remain a problem, however, as futures trading closed above US$50 per barrel for the first time in New York due to uncertainty over the political situation in Nigeria, one of Africa's top oil producers. A barrel of light crude settled at US$50.12, up US$0.48, on the New York Mercantile Exchange. Crude futures prices rose 2.5 percent for the week.
"We've gotten through September, traditionally the worst month for stocks, in pretty good shape," said Joseph Keating, chief investment officer at AmSouth Asset Management.
"If oil prices can move down further, I think we'll be set up nicely for a rally in November, December and early January," he said.
The Dow Jones industrial average rose 112.38, or 1.1 percent, to 10,192.65.
Broader stock indicators were sharply higher. The tech-focused NASDAQ composite index gained 45.36, or 2.4 percent, to 1,942.20, its highest closing level since July 9. The Standard & Poor's 500 index was up 16.92, or 1.5 percent, at 1,131.50, posting its best finish since June 30.
For the week, the Dow gained 1.5 percent, the NASDAQ was up 3.3 percent and the S&P 500 rose 1.9 percent. Bargain hunting in the technology sector and portfolio shuffling at the end of the quarter helped stocks move higher despite rising oil prices and losses due to Dow component Merck & Co, which lost 27 percent of its value on Thursday after pulling its Vioxx arthritis drug from the market due to an increased risk of heart attack and stroke.
On Friday, signs of strength in manufacturing buoyed stocks, though whether the strength will translate into more jobs won't be known until the government's next jobs report, due on Friday.
The September ISM manufacturing index reading came in at 58.5, slightly better than the 58.3 analysts had expected, but lower than the 59.0 reading in August.
The Commerce Department reported construction spending rose 0.8 percent in August, far outstripping the 0.3 percent Wall Street expected.
July's construction spending increase was revised upward as well, to 1.1 percent from 0.4 percent, giving investors hope that both businesses and consumers continued to put money into real estate despite recent interest rate increases from the Federal Reserve.
A lower-than-expected University of Michigan consumer sentiment index did not appear to have a negative impact on the market. The index reading for last month was 94.2, down from the 95.8 posted in August and less than the 96 reading Wall Street had forecast.
PeopleSoft surged US$2.98 to US$22.83 after the business software maker fired chief executive Craig Conway, replacing him with chairman and founder David Duffield. The company is currently fending off a US$7.7 billion takeover bid by rival Oracle Corp, which gained US$0.62 to US$11.90 on the news.
"It looks like Oracle is going to be able to close their deal for PeopleSoft, which has tech investors excited. And that could indicate more mergers down the road in the tech sector, which bodes well," said Keith Keenan, vice president of institutional trading at Wall Street Access. "Add to that the economic data, which looks decent, and the start of the third quarter, and that's got things going today."
Semiconductor shares saw renewed interest after J.P. Morgan upgraded two semiconductor equip-ment makers, Novellus Systems Inc and Teradyne Inc, breathing new life into the struggling technology sector.
Advancing issues outnumbered decliners by more than 4 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.95 billion shares, compared with 2.18 billion on Thursday.
The Russell 2000 index of smaller companies was up 12.09, or 2.1 percent, at 585.03.
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],”
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
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