Wall Street enters a typically quiet pre-holidays week following a tumultuous week that ended with strong gains despite grave concerns about the eurozone and mixed US economic data.
Fears that Europe’s sovereign debt could further weigh on the sluggish global recovery are likely to dominate next week’s trade.
“All eyes are on the eurozone now. That situation has the ability to push US investors significantly in one direction or another,” Miller Tabak chief economic strategist Dan Greenhaus said.
In the week to Friday, the Dow Jones Industrial Average rose 2.62 percent to 11,382.09.
The broader S&P 500 index added 2.97 percent to 1,224.71 points, while the technology-rich NASDAQ composite index rose 2.24 percent to 2,591.46 points, its highest point in nearly three years.
The trading week opened with global markets nose-diving after Ireland adopted a massive international bailout plan, sparking deep concerns that other debt-burdened eurozone states, mainly Spain and Portugal, would also require aid.
The Wall Street gloom turned into cheer on Wednesday and again on Thursday as encouraging employment data and retail sales boosted hopes that the US economic recovery was well underway.
On Friday, dismal US Department of Labor data showing a tiny rise in hiring, with the unemployment rate rising 0.2 percentage points to 9.8 percent, dented some of the confidence, but failed to pull down stocks.
“A disappointing November jobs report portrayed the US labor market as barely advancing, but we are skeptical that the picture is accurate,” analysts Aaron Smith and Ryan Sweet of Moody’s Analytics said.
Another source of optimism were overall very strong results from retailers and department stores following the Thanksgiving weekend, which unofficially starts off the holiday shopping season.
“The retailer [shares] are up 33 percent over the past three months. That’s a tremendous move and it shows the consumer is really there,” Cantor Fitzgerald analyst Marc Pado said.
Next week is historically marked by light trading as investors take a step back ahead of the Christmas holiday. And with few major economic indicators set, apart from October trade figures on Friday, stocks are likely to move cautiously.
“In the second week of December the market tends to pull back, partly because you come off the Thanksgiving weekend with a lot of important data, then you get a breather before the mad push in the third week of December for those final purchases,” Pado said.
The US dollar was set to remain a key player in the market, as its rise against the euro earlier this week in the wake of the eurozone’s woes weakened many US manufacturers, for whom a weak dollar means more business for their exports.
“If the European situation can calm down, then dollar weakness will reassert itself until the end of the year and you are likely to see the stock markets continue to trade upwards,” Greenhaus said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to