US stocks notched a sixth straight week of gains behind improving economic data, but analysts warned the rising odds of higher interest rates will challenge the durability of the rally.
Meeschaert Capital Markets president Gregori Volokhine said the increasing likelihood of higher US interest rates pushed the US dollar up this week, a market move with broad implications for equities in the weeks ahead.
“A strong dollar is not a guaranteed positive for everyone, especially energy producers and US exporters,” Volokhine said. “The market must digest this rally.”
There is also a sense US stocks must pause after climbing so far so fast.
“We’ve come a long way and the market needs to take a breather while it digests the information,” Ventura Wealth Management portfolio strategist Tom Cahill said. “The S&P 500 is moving into a resistance area around 2,100 and it’s going to take some time to build up the strength to go through that.”
For the week, the Dow Jones Industrial Average rose 246.79 points (1.40 percent) to 17,910.33.
The broad-based S&P 500 added 19.84 (0.95 percent) at 2,099.20, while the tech-rich NASDAQ Composite Index advanced 93.37 (1.85 percent) to 5,147.12.
News was dominated by the US Federal Reserve and the implications of economic data for US monetary policy.
On Wednesday, Federal Reserve Chair Janet Yellen told a congressional panel a hike next month in interest rates was a “live possibility” with the US economy improving.
Those odds increased significantly on Friday after the US Department of Labor reported that the US economy added 271,000 jobs last month, 90,000 more than analysts expected. The agency also reported a solid 2.5 percent rise in average hourly pay.
“This gives the Federal Reserve all the ammunition it needs to justify moving rates in December,” Cornerstone Wealth Management chief investment officer Alan Skrainka said. “If they backed off now, I think all of us would have whiplash.”
The Institute for Supply Management offered a lackluster reading on manufacturing sector activity, but other economic data were solid. Construction spending in September came in at a seven-year high, while the ISM’s report on the service sector rose. US auto sales also had another strong month last month.
In earnings news, Walt Disney Co enjoyed a 7.3 percent rise in quarterly profits to US$1.6 billion thanks to its ESPN sports network and parks and resorts business, but Rupert Murdoch’s Twenty-First Century Fox Inc saw profits tumble 35 percent to US$675 million due, in part to dismal performance of the Fantastic Four movie.
Facebook Inc became the latest big tech company to wow markets, garnering an 11 percent rise in third-quarter profits to US$891 million behind a 41 percent surge in revenues to US$4.5 billion, with big gains in mobile advertising.
The week’s disappointments included online coupon company Groupon Inc, which reported a net loss of US$27.6 million in the third quarter and announced that chief operating officer Rich Williams would take over as chief executive. Investors were unimpressed, dumping Groupon shares 26.4 percent for the week.
The week saw several small and medium-sized acquisitions, including the US$5.9 billion takeover of Candy Crush videogame creator King Digital Entertainment PLC by Activision Blizzard Inc.
Next week’s calendar includes the retail sales report for last month, as well as earnings from Viacom Inc and Cisco Systems Inc. McDonald’s Corp will also hold an investor day in New York, where it is expected to update the market on its turnaround plan.
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
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