Wall Street's recent rally has stalled with investor sentiment dented by revived fears about a US economic slowdown, or even a recession, analysts say.
The Dow Jones Industrial Average fell 0.46 percent in the week to Friday to 11,508.10, as the blue-chip index pulled back from a run toward its all-time high of 11,722.98.
The broad-market Standard & Poor's 500 lost 0.39 percent on the week to 1,314.78 and the tech-laden NASDAQ composite shed 0.75 percent to 2,218.93.
The week started on a positive note and the Dow moved to within 110 points of its record after the Federal Reserve, citing easing inflationary pressures, kept interest rates steady for the second time after 17 consecutive quarter-point increases.
But the market turned quickly south on Thursday after being jolted by a sharp drop in a regional Fed bank survey of manufacturing activity.
Marc Pado, analyst at Cantor Fitzgerald, said that "after the Philly Fed, worries have grown" about the possibility of a sharper economic deceleration.
"The sharp drop in the Philadelphia Fed index is a warning sign that maybe the economy is slowing more than believed," said Joel Naroff of Naroff Economic Advisors.
"This report is likely to cause a stir in the markets as it gives the impression that the manufacturing is following housing downward," Naroff said.
In the coming week, Wall Street gets a whiff of how the housing market is faring with tomorrow's report on existing home sales. Some fear a weak report could signal big economic troubles.
"There is a distinct possibility that the cooling in US housing markets could play out a lot faster than we expect, raising the likelihood of a US recession," said Steve Chan, economist at TD Bank Financial Group.
"TD Economics currently pegs the odds of such an occurrence at about 25 percent," he said.
Hugh Johnson at Johnson Illington Advisors said, "It's very clear that investors are very worried about the direction of the US economy, especially about the housing market. They want to see if it continues to slow at a gradual pace."
Stephen Gallagher, economist at Societe Generale, cites an unusual scenario in which the financial markets -- mainly the bond market -- are flashing recession signals but other economic data signal healthy growth. Overall, however, he sees economic fundamentals such as healthy corporate profitability as keeping the economy on track.
"Though we cannot exclude the possibility of a shock-driven recession, based on the cyclical force currently at play, a significant slowdown remains unlikely," Gallagher said.
Although most economists see a "soft landing" for the world's biggest economy, a number of stock market analysts are urging caution ahead of a season that has a tendency to be rocky.
"There's just enough uncertainty in the air to make us cautious about stocks in the near term," said Philip Orlando at Federated Investments. "The central bank has been trying to navigate a `soft landing' for the economy, and Federated believes they'll pull it off. But, if we're wrong, we think the risk is that the economy could slow too much, rather than too little."
Additionally, Orlando said housing is sliding, the auto industry is in crisis, and the retail outlook for the holiday season is lukewarm.
"Anecdotal evidence is far from conclusive, but we are starting to hear about softening sales and rising inventories," he said. "Under the circumstances, stocks could be vulnerable in the near term."
Bond prices surged as investors bet on further economic weakness that may allow the Fed to cut rates early next year. The yield on the 10-year Treasury bond slid to 4.597 percent from 4.798 percent a week earlier, while that on the 30-year bond tumbled to 4.738 percent from 4.919 percent.
Bond yields and prices move in opposite directions.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in