A clear improvement in the US Federal Reserve’s economic outlook and a solid outcome of the Fed’s stress tests for major banks gave the markets another strong 2 percent-plus boost this week.
The major indices reached multiyear highs, the Dow breaking solidly through the 13,000-point barrier, the S&P 500 edging over 1,400 and the NASDAQ Composite plowing past 3,000 all in the same week.
By the close of trade on Friday, the Dow Jones Industrial Average was up 2.39 percent for the week to 13,232.62, a level last seen on Jan. 3, 2008.
Photo: Bloomberg
The S&P 500 gained 2.43 percent to 1,404.17, its best level since May 2008.
The NASDAQ earned 2.24 percent in the week, closing at 3,055.26, its highest level since November 2000, when it was crumbling in the burst of the dot-com bubble.
While stocks appeared ready to drift all week despite the advances on the Greek bailout in Europe, an improvement in the Fed’s view of the economy on Tuesday gave traders a bit of reason to buy.
The US central bank slightly upgraded its outlook, saying the jobs market and consumer and business spending had improved since January.
However, the real burst in buying came near the end of Tuesday’s session when it leaked out that most of 19 big banks had passed the Fed’s tough stress tests for capital adequacy.
That sent bank shares soaring, helped as several banks subsequently announced dividend increases and share buybacks.
“Not one bank was ordered to recapitalize. That’s different from three years ago when they were all ordered to recapitalize,” Standard & Poor’s analyst Erik Oja said.
“And that’s very impressive with respect to European banks, which basically have to recapitalize,” he added.
Even rising were shares of Citigroup, the largest of four banks which failed the test and whose dividend plan was rejected by the Fed.
Citi declared the tests untransparent and unfair, which perhaps helped it put on 7.3 percent for the week.
Goldman Sachs’ shares also weathered the shock of a sharp attack on its attitude toward its customers by a resigning executive director in its London office.
Greg Smith said Wall Street’s most powerful investment bank had lost its way, “ripping off” customers for all it can get.
“I can honestly say that the environment now is as toxic and destructive as I have ever seen it,” he said in a column in the New York Times.
Goldman’s shares plummeted 3 percent on worries it would damage its reputation, but rebounded over the next two days for a solid weekly gain.
Apple was another big gainer in the week that it launched a new version of its hit iPad. It briefly topped the US$600 market after two key tech analysts boosted their price targets to above the US$700 line, before easing back for a 7.4 percent gain for the week, to US$585.57.
A handful of data releases, including a surprise downturn in the University of Michigan consumer confidence index, muddied the upbeat picture of the economy on Friday and put a hold on any more gains.
Analysts remained mixed on whether Fed Chairman Ben Bernanke’s extremely restrained view of the economy’s growth potential was excessively bearish or not.
“We are convinced Bernanke is reading the economic tea leaves accurately,” Chris Low of FTN Financial said. “The balance between economic negatives — three consecutive months of no growth in consumer spending, slowing demand for exports, slowing growth in business investment and less federal spending — outweigh the economic positives — faster job growth, a lower unemployment rate and fewer layoffs.”
“But it could be two or three months before the Fed chairman is vindicated,” Low added.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained