US investors bounced between the threat of rising oil prices and positive economic indicators to drive their trades as the stock markets ended a punchy week virtually unchanged on Friday.
Promising data on jobs, production and core inflation could not overcome the specter of higher oil prices driven by the fighting in Libya and the rise of pro-democracy groups in the oil-rich Gulf.
The Dow Jones Industrial Average finished 0.3 percent higher for the week at 12,169.88, while the broader S&P 500 added a bare 0.1 percent, to 1,321.15. The tech-heavy NASDAQ also gained just 0.1 percent, to 2,784.67.
“On balance we have not gone anywhere,” Hugh Johnson of Hugh Johnson Advisors said. “It’s been obviously a very volatile week ... It reflects a great deal of uncertainty primarily about the Middle East and the impact of the price of oil on the US economy, on earnings.”
Stocks vacillated for three days, as no news was concrete enough to drive the entire market.
While key indicators like auto sales and industrial production were strong, sentiment was mitigated by a warning on Tuesday from US Federal Reserve chief Ben Bernanke.
“Sustained rises in the prices of oil and other commodities would represent a threat both to economic growth and to overall price stability,” he warned, after months of playing down the general threat of inflation.
On Thursday, traders took note of a 5.2 percent drop in initial jobless claims in the last week of last month and reports of a Venezuelan move to mediate the Libya conflict to send the main stock indices flying between 1.6 percent and 1.8 percent for the day.
On Friday, new data confirmed the jobs trend, with 192,000 new non-farm jobs created last month — the best level in nine months — and the unemployment rate dropping one-tenth of a point to 8.9 percent.
However, selling dominated on the final day of the week.
Injecting a note of reality after Thursday’s rally, Patrick O’Hare of Briefing.com said: “Frankly, oil prices should have collapsed if there was a real sense peace in Libya was going to be achieved soon.”
Gregori Volokhine of Meeschaert Capital Markets called the market “binary,” caught between different signals.
“We anticipated the good figures that we finally did get, so we sell on the news,” he said of Friday’s downturn despite the strong new-jobs data. “If there is a problem, it is energy, that can affect a number of sectors of the economy.”
“For the moment, the market accepts the level of oil prices, but it hasn’t taken into account that possibly the price will remain high for a long time.”
Automakers also got little help from last month’s strong sales reports, as the rising costs of production inputs, and of oil, raised questions about future margins and sales.
Ford lost 4.3 percent, while GM was off 2.6 percent.
Investors face a modest series of economic news releases next week, including the January trade deficit numbers on Thursday and last month’s retail sales on Friday.
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