Mixed signals on the economy and interest rates and worries about the impact of credit and housing woes on the finance sector has put Wall Street on the defensive heading into the year-end season.
While the market heads into a holiday season that is traditionally positive for stocks, analysts say the murky outlook could make further gains difficult.
In the week to Friday, the Dow Jones Industrial Average of blue chips dropped 1.5 percent to 13,595.10. The broad market Standard & Poor's 500 index shed 1.67 percent for the week to 1,509.65, while the tech-heavy NASDAQ managed a gain of 0.22 percent to 2,810.38.
The Dow is up 9.1 percent for the year, with the S&P 500 gaining 6.4 percent and NASDAQ adding 16.4 percent.
Over the past week, the market got what appeared to be positive news, but seemed cautious on the future outlook.
The US Federal Reserve cut its base rate by a quarter-point to 4.5 percent, in line with market expectations, to head off what appears to be a softening of economic conditions.
At the same time, data showed the US economy expanded at a robust 3.9 percent pace in the July-September quarter, shaking off credit and housing market turmoil.
And another report showed a robust gain of 166,000 new jobs last month to start off the fourth quarter with a positive tone.
Still, the market seemed to waver on the Fed move, especially its statement suggesting that the risks on inflation and weaker growth are roughly equal.
"Unfortunately, this week's Fed statement inferred that it is through cutting interest rates," said Peter Morici, economist at the University of Maryland.
"This only served to further destabilize credit, stock and housing markets, and negate the potential positive effects of its quarter-point reduction in the federal funds rate."
Fred Dickson, market strategist at DA Davidson & Co, said Wall Street is looking ahead at a potentially bleak holiday season and are worried about high food and energy prices.
Bonds benefited from investor caution. The yield on the 10-year Treasury bond fell to 4.291 percent from 4.389 percent a week earlier.
The yield on the 30-year Treasury dipped to 4.595 percent from 4.683 percent.
Bond prices and yields move in opposite directions.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by