Wall Street's rally is back on track after reassuring words from the US Federal Reserve and data backing the central bank's premise that the US economy is accelerating with modest inflation pressure.
In the week to Friday, the blue-chip Dow Jones Industrial Average jumped to fresh all-time highs before settling on Friday at 12,653.49, a weekly gain of 1.33 percent.
The broad-market Standard & Poor's 500 index picked up 1.84 percent to end the week at 1,448.39 and the tech-heavy NASDAQ composite index added 1.66 percent to 2,475.88.
The key event of the past week was the Federal Reserve policymakers' two-day meeting, which ended on Wednesday.
As expected, the panel made no change to interest rates, and in its policy statement suggested the economy was hitting its stride with inflation diminishing.
Economic data seemed to back the Fed's view, with one report showing the US economy expanded at a 3.5 percent pace in the fourth quarter of last year.
A separate report showed 111,000 new jobs created in January, with upward revisions to earlier payrolls data, but only small gains in wages.
"Increasingly, it looks as if the US economy is in a sweet spot," said Marc Levesque, chief economics strategist at TD Bank Financial Group.
"Although the housing market correction has not yet run its course, consumer spending is holding up well," Levesque said.
"The evidence on the US economy pointed to healthy growth with limited, and perhaps declining, inflation pressures," said Stephen Gallagher, economist at Societe Generale in New York.
Gallagher and others said the latest news supports the "soft-landing, Goldilocks economy" which is not too hot or too cold, which would allow the Fed to hold rates steady for some time or even cut rates later this year.
"All is just right," Gallagher said. "Labor markets were the one fear in this otherwise fairly-tale economy. Yet, even the labor market appears to be conforming."
John Wilson, equity strategist at Morgan Keegan, said the market is shaking off fears that the economy may be too strong.
"We were into that `good news is bad news' mindset that occasionally pervades the trading floor," he said.
"Over the past several days, good news has become good news again as the economic releases seem to be pointing to a strong economy without inflation pressures to speak of. That's the ideal environment for stock prices," Wilson said.
One worry for some analysts is that the market has been moving up since July without a "correction" to take out some of its speculative fervor.
"We could get a correction any time soon because it's very rare to see eight consecutive months of gains," said Marc Pado at Cantor Fitzgerald.
Bob Doll, chief investment officer at the Wall Street firm BlackRock, agreed that stocks "are overdue for a correction" but does not believe it will end the bull market.
"Equities have enjoyed a largely uninterrupted positive run since July, and the Dow Jones, in fact, has now experienced its longest string in 50 years of not having a two-percent down day," he said.
"In our opinion, investors should certainly be cautious, and we do expect 2007 to be noticeably more volatile for stocks than 2006 was, but we reiterate our belief that this year should be another strong one for stocks," Doll added.
The bond market firmed. The yield on the 10-year Treasury bond fell to 4.827 percent from 4.879 percent a week earlier while that on the 30-year Treasury bond dipped to 4.926 percent against 4.980 percent. Bond yields and prices move in opposite directions.
In the coming week the market will digest a survey from the Institute of Supply Management on the services sector of the US economy, and quarterly results from tech bellwether Cisco Systems and media-entertainment giants Disney and News Corp.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
ALL ABOUT STRATEGY: The company is optimistic, saying that its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity Quang Viet Enterprise Co (QVE, 廣越), which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, yesterday said that revenue might drop 5 to 10 percent annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016. Quang Viet posted record-high revenue of NT$16.26 billion (US$537.45 million) last year, up 22 percent from 2018. Down jackets made up 40 percent of it revenue last year. North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 to 30 percent from a
ELECTRONICS Lite-On delays sale of unit Lite-On Technology Corp (光寶科技) yesterday said it would postpone the sale of its solid-state drives (SSD) business to Kioxia Holdings Corp, formerly known as Toshiba Memory Holdings Corp, due to disruptions amid the COVID-19 pandemic. Last year, the Taiwan-based electronics components supplier struck the deal with the Japanese firm, agreeing to sell the unit for US$165 million. Citing unfinished integration work due to the pandemic, Lite-On has deferred today’s closing date until further notice, adding that the delay would not have a negative effect on the unit’s operations. AUTO PARTS Hiroca approves dividend Automotive interior parts supplier Hiroca
The output of the global smartphone industry this year is to contract by 7.8 percent on an annual basis as the COVID-19 pandemic ushers in a global recession, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report on Monday. The global production of smartphones is expected to fall to 1.29 billion units, as the pandemic dampens demand for consumer electronics, leading to a decline in shipments across Europe and North America, TrendForce said. With consumers delaying smartphone purchases and thereby lengthening the device replacement cycle, overall prices would suffer a setback that is expected to negatively affect the profitability of smartphone