Investors preoccupied with inflation extended Wall Street's decline on Friday, selling stocks sharply lower in response to a ballooning US trade deficit. The drop, which came in spite of a bullish sales outlook from Intel Corp, left the market substantially lower for the week.
Wall Street was unnerved as the US Commerce Department reported that the trade deficit widened to US$58.3 billion in January, the second highest level after November's record reading. While the nation's exports rose to record highs, imports rose even faster, leading investors to fear a loss of confidence in the dollar overseas. The dollar fell against most major currencies after the news came out.
The trade deficit sapped any momentum the market may have gained from Intel, a Dow Jones industrial, which reported late Thursday that sales for the current quarter would be at the higher end of previous forecasts. That bodes well for the tech sector and the overall economy, but inflation fears overshadowed the announcement.
"The economy is fairly good. Consumers are spending money. There's strength there," said Scott Wren, equity strategist for AG Edwards & Sons. "But with this trade deficit thing, the dollar, and oil prices where they are, the market's going to need a little more convincing."
The Dow fell 77.15, or 0.71 percent, to 10,774.36.
Broader stock indicators also moved sharply lower. The Standard & Poor's 500 index was down 9.17, or 0.76 percent, at 1,200.08, and the NASDAQ composite index lost 18.12, or 0.88 percent, to 2,041.60.
Inflation worries dominated Wall Street this week, with higher oil prices prompting investors to cash in profits after the previous week's strong gains. After the Dow came within 16 points of 11,000 on Monday, it fell more than 200 points by Friday's close. For the week, the Dow lost 1.52 percent, the S&P 500 slid 1.8 percent and the NASDAQ fell 1.4 percent.
The dollar slipped lower on news of the widening trade gap, giving back earlier gains against the euro and yen. Bonds also fell as investors worried that the deficit and historically low dollar could still trigger inflation. The yield on the 10-year Treasury note rose to 4.55 percent, up from Thursday's close of 4.47 percent.
Oil futures spiked higher as the dollar slipped through the morning, climbing back above US$54 per barrel. A barrel of light crude settled at US$54.43, up US$0.89, on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies was down 0.10, or 0.02 percent, at 626.84.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion