US stocks enter 2011 at two-year highs, facing a crucial reading this week on the health of the US economy: the monthly unemployment and job creation data.
“From all indications available, the year should begin well,” Gregori Volokhine at Meeschaert Capital Markets said.
“There are real signs that monetary policy and fiscal policy are having an effect on the economy,” the analyst said. “There’s a wave of optimism which began in the markets several months ago and which now is being reinforced by macroeconomic numbers.”
Over the past week, the Dow Jones Industrial Average barely budged, slipping 0.03 percent to close Friday at 11,577.51 points. The tech-rich NASDAQ dropped 0.48 percent to 2,652.87 points, while the Standard & Poor’s 500 index, a broad measure of the market, added 0.07 percent to 1,257.64 points.
The blue-chip Dow index, which gained 11.02 percent last year, added more than 5 percent last month alone. On Wednesday it finished at its highest level since August 2008.
“Investors will probably look back on this December as one to remember,” Frederic Dickson at DA Davidson & Co said.
“Big year-end rallies often fizzle out shortly after the beginning of a new calendar year,” Dickson said. “While we believe the economic landscape will continue to support higher stock prices in 2011, the market now appears technically extended from a longer-term perspective.”
The final week of last year was marked by extremely thin volumes. Traditionally quiet because of the holidays, this year’s lull was even deeper after a blizzard along the East Coast kept many traders away from their offices.
Trading sessions were listless and final results were weak.
The Dow, for example, slipped 0.14 percent on Thursday, despite three positive US economic indicators: new claims for jobless insurance benefits fell to their lowest level in two-and-a-half years last week, pending home sales unexpectedly rose in November, and the Chicago ISM index showed manufacturing activity at its fastest pace in more than 20 years.
“A lot of investors are waiting for the new year to see what the December employment report looks like and to wait until the fourth-quarter earnings reports start to be released,” Hugh Johnson of Hugh Johnson Advisors said.
Stocks face a calendar crammed with economic releases, capped on Friday by the closely watched US unemployment and job creation report. The labor data in previous months has been grim, leaving the unemployment rate near 10 percent as the economy struggles to recover from recession.
“That’s going to be the test,” Volokhine said. “This number needs to confirm that the jobs market is improving.”
Among other economic numbers slated are construction spending and the ISM manufacturing index tomorrow, industrial orders on Tuesday and the ISM services index on Wednesday.
The US Federal Reserve is set to publish the minutes of its last policy-setting meeting on Tuesday.
“With low interest rates, improving economic data and healthy projected earnings growth, the outlook for 2011 is relatively bullish,” Briefing.com analysts said in a client note. “Although broad market valuation remains reasonable, with stocks at two-year highs, sentiment near a bullish extreme and several macro risks still in the picture, it may be a bumpy ride again in 2011.”
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to