The showdown in Washington over the so-called “fiscal cliff” gave US stocks another volatile week, but the apparent political stalemate — just weeks before a potentially devastating fiscal crunch — was not the defining market issue.
The key indices had diverged sharply by Friday, with the explanation simple: Apple Inc.
The iPhone and iPad maker, the world’s largest company by market capitalization, lost 8.9 percent in the week, ending at US$533.25, down US$52.
It was Apple’s weight that pulled the NASDAQ Composite down 1.07 percent to 2,978.04.
Meanwhile, the Dow Jones Industrial Average closed the week at 13,155.13, up 0.99 percent, as the broad-based S&P 500, which includes components from both, came in with an 0.13 percent gain to 1,418.07.
Apple’s fall, including a stunning 6.4 percent loss on Wednesday — the worst one-day drop in four years — accelerated the decline from its peak above US$700 in September.
Analysts have begun raising doubts the market darling can keep up the astounding growth performance it has delivered in past years, especially as agile competitors challenge its leading cellphones and tablets.
Stripped of Apple, stocks seemed somewhat immune to the fight over the fiscal cliff, the US$500 billion in tax hikes and spending cuts slated to come in beginning Jan. 1 that could send the US economy back to recession.
The cliff issue did not go away: by the end of the week, there was little sign that US President Barack Obama and US Congressional Republicans had found common ground on which to avert the cliff.
Still, financials rose 1.1 percent in the week, while capital goods increased by 0.4 percent, big industrial groups 1.3 percent and energy companies 0.8 percent.
Dozens more companies were taking action because of the fight — moving forward dividend payments and announcing hefty special payouts to avoid higher dividend taxes likely to come after Jan. 1.
Analysts expect the cliff fight to have more of a negative impact on the market in the coming week if there is no sign of compromise between Republicans and Democrats on the key issues.
Otherwise, the focus will be on the US Federal Reserve’s last policy meeting of the year on Tuesday and Wednesday, with an announcement set to be made on Wednesday.
With last month’s job creation data still unimpressive — even if the unemployment rate fell to 7.7 percent — the Fed is expected to hold firm on its ultra-low rates policy and expand its outright bond purchase program to make up for the expiration of its Operation Twist intervention.
The replacement purchases would likely be about US$45 billion a month, taking total Fed action aimed at pressing down long-term interest rates to US$85 billion a month, he said.
Key data releases over the coming week include the trade balance in October (on Tuesday), import prices (on Wednesday); retail sales and producer prices for last month (on Thursday); and consumer prices (on Friday).
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by