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.
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],”