US stocks finished a week of mixed economic data divided, with the tech-rich NASDAQ Composite Index scoring gains as the other two indices retreated from record highs.
The Dow shed 95.24 points (0.56 percent) over the week to finish at 16,851.84, while the S&P 500 dipped 1.91 (0.10 percent) to 1,960.96 after both indices had finished the previous week on historic highs.
By contrast, the NASDAQ advanced 29.89 points (0.68 percent) to close at 4,397.93 after the tech-rich index picked up momentum in part due to the highly successful initial public offering of video camera maker GoPro Inc, which gained nearly 50 percent from its offering price in its first two days of trade.
Analysts said stocks were still fairly well positioned for further gains given confidence in the economic recovery and somewhat lower anxiety on Iraq, as evidenced by an ebbing of oil prices.
“This bull market remains intact because investors believe we are moving further and further away from a recessionary potential,” S&P Capital IQ chief investment strategist Sam Stovall said.
Still, Stovall said some of the week’s disappointing economic data was a “bit unnerving” and suggestive of “a half-speed recovery mode.”
The week’s most dramatic bit of data was Wednesday’s report that GDP fell at a 2.9 percent annual pace in the first quarter of the year, much worse than the previous estimate of 1 percent and the sharpest decline in five years.
However, though shocked at the report, analysts said it had minimal implications for stocks.
“It was a surprise, but it should really be irrelevant because it’s in the past,” said Bill Lynch, director of investment at Hinsdale Associates Inc.
Among other data, reports showed new home sales last month reached their fastest pace in six years and that US consumer confidence this month jumped to its highest level since January 2008.
However, consumer spending, which accounts for more than two-thirds of the nation’s economic activity, rose a mere 0.2 percent last month after a flat April. Analysts were also disappointed at the 1 percent drop in durable goods orders seen the previous month.
The week’s corporate news included more takeovers, which have helped propel the broader market this year, analysts said.
The pace of the country’s merger and acquisition activity this year “continues to marvel and amaze,” a S&P Capital IQ report said, adding that the US market is on pace to notch its first US$1 trillion-plus year since 2007.
Major transactions this week included aluminum producer Alcoa Inc’s US$2.9 billion purchase of Firth Rixson Inc, a British manufacturer of aerospace jet engine components, and software giant Oracle Corp’s US$5.3 billion takeover of MICROS Systems Inc, which has more than a half-million customers, including clients in hotels and retail.
Broadcasters like CBS Inc (+3.7 percent) and cable companies like Comcast Corp (+2.6 percent) got a lift after the US Supreme Court ruled that online television startup Aereo Inc violated copyright laws by retransmitting broadcasts through antenna equipment. The court ruled that Aereo effectively operates like a cable company and must therefore pay for broadcast rights.
Yet oil refiners, including Valero Energy Corp (-9.9 percent) and Marathon Petroleum Corp (-11.4 percent) plummeted after the US issued two licenses for the export of condensate for the first time in four decades, a move that could lead to further easing of the crude oil export ban and push prices higher.
Next week’s agenda features the Institute for Supply Management’s reports on manufacturing and service-sector activity, as well as data on the trade deficit and construction spending. The week’s most closely-watched release — the jobs report for this month — is to come on Thursday morning on the eve of the Independence Day holiday. With trading volume likely low generally for the holiday week, analysts said a surprise result could jolt the market.
“Usually traders try to push the markets ... [and] with many fewer people involved the individual traders have a better opportunity to move the markets,” Stovall said.
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],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts