Wall Street rode improving economic data to fresh records this week, spawning comparisons to July 4th fireworks on the eve of the US Independence Day holiday on Friday.
The Dow Jones Industrial Average jumped 216.42 points (1.28 percent) for the four-day week to 17,068.26, while the S&P 500 increased 24.48 (1.25 percent) to 1,985.44. Both indices notched closing records three days in a row and the Dow closed above 17,000 for the first time.
The gains were also strong on the tech-rich NASDAQ Composite Index, which tacked on 88 points (2 percent) to close on 4,485.93.
The highlight of the week was Thursday’s US Department of Labor employment report, which showed that the nation’s economy added a healthy 288,000 jobs last month, while the unemployment rate fell from 6.3 percent in May to 6.1 percent last month.
Economists characterized the report as the latest indication of pickup in the world’s No. 1 economy after activity plummeted in the first quarter mainly due to unusually cold weather, but some analysts viewed the market’s buoyant reaction with concern.
“Investors are growing concerned with the increased bullishness in the market and ... wondering if the time is growing close to a correction,” Kenjol Capital Management LLC portfolio manager David Levy said.
Levy said the market could retreat in the coming weeks if second-quarter earnings disappoint, or if investors conclude that the US Federal Reserve is likely to move up its timetable for raising interest rates, but Wells Fargo Advisors senior equity strategist Scott Wren said the market has plenty of running room.
“Earnings are at a record high, valuations are reasonable and the global recovery, albeit slow, continues to ramble on,” Wren said in a note. “The cyclical bull market, at least in our opinion, still looks like it has several more years to run.”
Most of the week’s other economic reports were solid, if unspectacular. The Institute for Supply Management’s manufacturing purchasing managers’ index dipped 0.1 point to 55.3 last month, a disappointment compared with the expected 0.4-point gain, but well above the 50 reading that separates growth from contraction.
Meanwhile, the institute’s index for services sector activity fell to 56 last month from a strong advance to 56.3 in May, missing the 56.5 reading forecast by analysts.
Other data showed a lower US trade deficit and a big jump in pending home sales in May, while automakers reported sales last month that were 1.2 percent above last year’s level.
Kelly Blue Book senior analyst Alec Gutierrez said the strong auto sales showed consumer confidence was on the rise and likely reflects a decision of some buyers to move up purchases to take advantage of favorable financing conditions before the Fed raises interest rates.
The strong sales were a bright spot for General Motors Co, which unveiled its plan for paying potentially hundreds of victims millions in the ignition-switch recall scandal. The US auto giant also announced that it is recalling 8.4 million more cars in North America, taking the total number of vehicles it has recalled this year to about 30 million.
US banking giant JPMorgan Chase announced that chief executive Jamie Dimon will undergo about eight weeks of radiation and chemotherapy treatment for throat cancer. Dimon said his prognosis was “excellent” and that he would continue working, but the bank assured that it has a succession plan in place.
In merger-and-acquisition news, PPG Industries, a supplier of paints, coatings and glass, announced a US$2.3 billion acquisition of Mexican company Consorcio Comex SA de CV in a move to build its presence in Mexico and South America.
Devon Energy Corp announced the sale of non-core energy assets in Texas and other sites to Linn Energy LLC for US$2.3 billion.
Markets next week will turn their attention to second-quarter earnings with reports from Alcoa Inc and Wells Fargo. The calendar is fairly quiet as far as economic data, although the Fed is to release minutes from its policy meeting last month on Wednesday.
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
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