Wall Street heads into the Christmas week on a merry note with fears abating about a widening financial crisis and a potential recession in the world's biggest economy.
Despite persistent worries about a credit squeeze that could choke off economic growth, the main stock indexes posted healthy gains in the week before Christmas.
The Dow Jones Industrial Average climbed 0.85 percent for the week to Friday to 13,450.65 and the broad market Standard & Poor's 500 advanced 1.1 percent to 1,484.46.
The technology-heavy NASDAQ composite rallied 2.1 percent to 2,691.99.
With three full trading sessions left for this year and shortened trading days tomorrow and on Dec. 31, the Dow is holding a gain for the year of 7.9 percent, with the S&P up 4.7 percent and NASDAQ 11.5 percent.
Some analysts say the market could build on those gains around the holidays in the so-called Santa Claus rally effect.
"It has been observed by the Stock Trader's Almanac that the period covering the last five trading days of a year and the first two trading days of the new year often produces a respectable rally," Jeffrey Ham at Briefing.com said.
Volatile trading in the past few months has been marked by worries that the crises that began with a meltdown in housing and spread to the banking and finance sector would drag the overall economy lower.
But data in recent days suggests US consumer spending, which accounts for two-thirds of economic activity, is holding firm. That along with rising exports may keep the US economy above water, some analysts say. One report showed consumer spending up a solid 1.1 percent last month.
"December data should confirm that the US isn't in recession, or at least wasn't as of the fourth quarter," said Avery Shenfeld, senior economist at CIBC World Markets.
"Look for the tone for much of the coming month to be set by the employment data, given that job growth is now the key bulwark against recession," Shenfeld said.
Citigroup economist Robert DiClemente said recession talk is still prominent but that a downturn may be averted if the US Federal Reserve plays its cards right after cutting rates by a full percentage point since September.
"There are reasons to be optimistic that the economy will muddle through this mess with continued help from policy," he said.
"We expect the Fed to continue cutting rates by at least 75 basis points in coming months and that these actions will provide a measure of financial stability sufficient to quarantine the remaining drag from housing and its spillover."
Sherry Cooper, chief economist at BMO Capital Markets, is more worried, saying that credit is drying up in the banking system and that central banks such as the Fed have done too little too late, leaving the US and other economies at risk.
"The US housing collapse has already frozen financial markets and raised the cost of capital for all but triple-A rated governments, generating enormous losses at financial institutions of all sorts," she said.
"My sense is the prospects of US recession are rising fast and the next pipedream to burst will be the theoretical decoupling of the emerging economies from troubles in the US economy."
Bond prices rose in the week. The yield on the 10-year Treasury bond eased to 4.168 percent from 4.232 percent a week earlier, and that on the 30-year Treasury fell to 4.575 percent from 4.658 percent. Bond prices and yields move in opposite directions.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS