US stocks posted their steepest weekly drop since July 2002 after lower-than-estimated home construction, retail sales and manufacturing reinforced speculation that the economy is falling into a recession.
Intel Corp led technology companies to their fourth straight weekly decline after the world's biggest chipmaker forecast sales below analysts' expectations.
Shares of Citigroup Inc, the largest US bank by assets, plunged to the lowest level since February 1999 after reporting the biggest loss in its 196-year history.
Home construction fell 14 percent last month, concluding the worst year for the industry since 1980, the US Commerce Department said. Separate government reports showing retail sales fell for the first time since June and manufacturing in the Philadelphia region slid to a six-year low heightened concern that the housing slowdown is infecting the broader economy.
"It looks to me like we're already in a recession," said Jason Cooper, who helps manage about US$2.5 billion at 1st Source Investment Advisors in South Bend, Indiana. "There's nothing out there to say the worst is over."
The Standard & Poor's 500 Index declined 5.4 percent this week to 1,325.19, the lowest level since September 2006. The benchmark for US equities has tumbled 9.8 percent this year, its worst-ever start.
The Dow Jones Industrial Average dropped 4 percent to 12,099.30, extending its decline for this year to 8.8 percent. The NASDAQ Composite Index lost 4.1 percent to 2,340.02. The Russell 2000 Index, whose members have a median market value of US$504 million, dropped 4.5 percent to 673.18. The small-company index's 21 percent decline from its July record marks its first bear-market retreat since 2002. Two-year Treasuries yields sank to 2.35 percent, the lowest since May 2004.
US President George W. Bush's proposed economic stimulus package of up to US$150 billion and Federal Reserve Chairman Ben Bernanke's assurance that the central bank was ready to take "substantive additional action" on interest rates failed to allay investor concern that a weakening economy would hurt corporate earnings.
"You can see almost every member of our government talking about their concern for the economy and what they're trying to do to help, but that only makes it feel worse from the financial markets' point of view," said David Pearl, who helps oversee about US$6.7 billion as head of US equities at Epoch Investment Partners in New York.
More than 100 companies in the S&P 500 will report earnings next week, including Apple Inc, Bank of America Corp and Pfizer Inc. Analysts estimate that fourth-quarter profit for index members as a group fell 17 percent, Bloomberg data showed. That would be the biggest quarterly drop since 2001.
US stock markets will be closed tomorrow for the Martin Luther King Jr holiday.
The Treasury will auction US$21 billion of three-month bills and US$19 billion of six-month bills on Tuesday. Both were yielding 2.85 percent in when-issued trading. The Treasury will sell one-month bills on Wednesday.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
BIG BUCKS: Chairman Wei is expected to receive NT$34.12 million on a proposed NT$5 cash dividend plan, while the National Development Fund would get NT$8.27 billion Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday announced that its board of directors approved US$15.25 billion in capital appropriations for long-term expansion to meet growing demand. The funds are to be used for installing advanced technology and packaging capacity, expanding mature and specialty technology, and constructing fabs with facility systems, TSMC said in a statement. The board also approved a proposal to distribute a NT$5 cash dividend per share, based on first-quarter earnings per share of NT$13.94, it said. That surpasses the NT$4.50 dividend for the fourth quarter of last year. TSMC has said that while it is eager
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Pegatron Corp (和碩), an iPhone assembler for Apple Inc, is to spend NT$5.64 billion (US$186.82 million) to acquire HTC Corp’s (宏達電) factories in Taoyuan and invest NT$578.57 million in its India subsidiary to expand manufacturing capacity, after its board approved the plans on Wednesday. The Taoyuan factories would expand production of consumer electronics, and communication and computing devices, while the India investment would boost production of communications devices and possibly automotive electronics later, a Pegatron official told the Taipei Times by telephone yesterday. Pegatron expects to complete the Taoyuan factory transaction in the third quarter, said the official, who declined to be
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