A wave of corporate deals and generally positive quarterly earnings competed with gloomy news developments in Ukraine and Gaza for attention this week, but ultimately prevailed to lead US stocks higher.
For the week, the Dow Jones Industrial Average gained 156.37 points (0.92 percent) to finish on 17,100.18, while the broad-based S&P 500 rose 10.65 (0.54 percent) to 1,978.22 points and the tech-rich NASDAQ Composite Index added 16.66 (0.38 percent) to end at 4,432.15.
The week’s gains came despite twin crises that emerged on Thursday when a Malaysia Air jet carrying 298 people crashed in Ukraine in a disaster that US officials say was likely caused by a missile shot from an area of Ukraine controlled by pro-Russia separatists.
Only hours after the plane crashed, Israel launched a ground operation in Gaza, lifting the Palestinian death toll to 296 on Friday, the 11th day of assault that Israel argues is needed to counter Hamas’ “terrorist efforts.”
US stocks nose-dived on Thursday, but surged the next day even as the US sharpened criticism of Russia’s actions in Ukraine and as Israel warned of a wider Gaza assault.
“The negativity is being shrugged off for the most part,” said Michael James, managing director of equity trading at Wedbush Securities, adding that the market is showing “tremendous amounts of resilience.”
“Investors are continuing to embrace risk and buy every dip,” Kjolen Capital Management portfolio manager David Levy said.
The market is giving greater weight to positive economic news than to geopolitical threats like Ukraine, where the economic implications are murky and there is little obvious potential for a “prolonged impact on corporate America,” according to Levy.
“The economy is continuing to show signs of improvement,” Levy said. “We’re seeing strong corporate profitability, as well as strong merger and acquisition activity. That’s why the market is able to shrug off geopolitical news.”
Major deals this week included a plan unveiled by US tobacco giant Reynolds American Inc to acquire rival Lorillard Tobacco Co for US$27.4 billion and sell cigarette brands including Salem and Winston to British firm Imperial Tobacco Group PLC for $7.1 billion.
In other deals, US pharmaceutical giant AbbVie sealed a US$54 billion takeover of Dublin-based Shire Pharmaceuticals PLC, which had opposed earlier bids, Whiting Petroleum Corp announced plans to acquire Kodiak Oil & Gas Corp for US$6 billion and Abbott Laboratories sold its branded generic drugs for developed markets to generic drugmaker Mylan Laboratories Inc for stock valued at US$5.3 billion.
Rupert Murdoch rocked the media world when his entertainment company, Twenty-First Century Fox Inc, offered US$80 billion for Time Warner Inc. Time Warner turned down the bid, but Murdoch is “determined to buy Time Warner,” a person familiar with the matter said.
Technology giants IBM Corp and Apple Inc, while avoiding show-stopping mergers, announced what they called a “landmark” partnership to collaborate on applications for Apple’s iOS system, which will employ IBM’s supercomputing analytics.
Analysts were also smiling at the early results from earnings season.
Standouts included Dow component Intel Corp, which raised its profit forecast and announced US$20 billion in additional share repurchases; Google Inc, which notched a 22 percent increase in revenue behind a surge in “paid clicks;” and Goldman Sachs, which reported US$4.10 per share in earnings, beating expectations by more than US$1.
“It’s been a very good earnings season,” Meeschaert Capital Markets president Gregori Volokhine said. “There were lots of doubts about it earlier.”
Through Friday afternoon, 84 companies on the S&P 500 reported earnings, with 56 beating analyst expectations, 15 missing and 13 meeting projections, according to S&P Capital IQ.
Next week’s earnings calendar is also busy and includes giants like Apple, Microsoft Corp, Boeing Co, Facebook Inc, McDonald’s Corp and American Airlines Inc.
The schedule of economic indicators includes reports on existing-home sales, new home sales and durable goods orders.
In Italy’s storied gold-making hubs, jewelers are reworking their designs to trim gold content as they race to blunt the effect of record prices and appeal to shoppers watching their budgets. Gold prices hit a record high on Thursday, surging near US$5,600 an ounce, more than double a year ago as geopolitical concerns and jitters over trade pushed investors toward the safe-haven asset. The rally is putting undue pressure on small artisans as they face mounting demands from customers, including international brands, to produce cheaper items, from signature pieces to wedding rings, according to interviews with four independent jewelers in Italy’s main
Japanese Prime Minister Sanae Takaichi has talked up the benefits of a weaker yen in a campaign speech, adopting a tone at odds with her finance ministry, which has refused to rule out any options to counter excessive foreign exchange volatility. Takaichi later softened her stance, saying she did not have a preference for the yen’s direction. “People say the weak yen is bad right now, but for export industries, it’s a major opportunity,” Takaichi said on Saturday at a rally for Liberal Democratic Party candidate Daishiro Yamagiwa in Kanagawa Prefecture ahead of a snap election on Sunday. “Whether it’s selling food or
CONCERNS: Tech companies investing in AI businesses that purchase their products have raised questions among investors that they are artificially propping up demand Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday said that the company would be participating in OpenAI’s latest funding round, describing it as potentially “the largest investment we’ve ever made.” “We will invest a great deal of money,” Huang told reporters while visiting Taipei. “I believe in OpenAI. The work that they do is incredible. They’re one of the most consequential companies of our time.” Huang did not say exactly how much Nvidia might contribute, but described the investment as “huge.” “Let Sam announce how much he’s going to raise — it’s for him to decide,” Huang said, referring to OpenAI
The global server market is expected to grow 12.8 percent annually this year, with artificial intelligence (AI) servers projected to account for 16.5 percent, driven by continued investment in AI infrastructure by major cloud service providers (CSPs), market researcher TrendForce Corp (集邦科技) said yesterday. Global AI server shipments this year are expected to increase 28 percent year-on-year to more than 2.7 million units, driven by sustained demand from CSPs and government sovereign cloud projects, TrendForce analyst Frank Kung (龔明德) told the Taipei Times. Demand for GPU-based AI servers, including Nvidia Corp’s GB and Vera Rubin rack systems, is expected to remain high,
RSS