Wall Street’s mood has swung back to morose amid resurgent crude oil prices and fresh worries that the US economy’s woes are deeper than expected.
The dollar’s rebound has stalled and crude oil is back at record highs amid renewed fears of a Middle East conflict.
On the economic front, US home foreclosures are rising along with the unemployment rate, which jumped half a point to 5.5 percent last month.
A horrible month for auto sales — overall industry sales were down 10.7 percent last month — stoked fears that the economy may be in a downward spiral, with consumers shunning big purchases, which hurts manufacturing and leads to more job cuts.
“In the past few months it appears that the US consumer finally reached a tipping point. Rising oil prices have helped push consumer confidence to deep recession levels,” said Ethan Harris, economist at Lehman Brothers.
In the coming week, the market must face up to fresh data on retail sales that will show the health of US consumers, and reports on the US trade balance and inflation.
In the week to Friday, the Dow Jones Industrial Average of 30 blue-chip shares slid 3.39 percent to 12,209.81, with most of the losses coming on the heels of Friday’s shock labor report and surge in crude oil to above US$138 a barrel.
The Standard & Poor’s 500 broad-market index lost 2.83 percent to 1,360.68 and the tech-heavy NASDAQ composite retreated 1.91 percent on the week to 2,474.56.
The Dow is now off 7.95 percent for the year while the S&P is lower by 7.33 percent and the NASDAQ 6.7 percent.
Diane Swonk, chief economist of Mesirow Financial, said the economy remains mired in a sluggish pattern even if it may not technically be a recession.
“The economy is not expected to grow fast enough to absorb the influx of new workers to the labor force and the unemployment rate is expected to continue to rise,” she said, adding that the situation is closer to what economists term a “growth recession.”
“The economy is expected to continue skirting a statistical recession, but that doesn’t mean times won’t be tough for a large cross section of the population and businesses. Any gains that we do see in response to tax rebates and monetary stimulus over the summer, in particular, are not expected to do much to boost consumer or business confidence ahead of November [presidential] elections,” she said.
Al Goldman at AG Edwards said that despite the gloomy outlook, the stock market could muddle through, arguing that the best gains often come when things appear bleakest.
“The S&P 500 has not yet been able to break out of the top of its 1,420 to 1,320 trading range, but we believe it will,” he said.
“We continue to believe the market is going through an emotional metamorphosis as it transitions from bear to bull ... it is a tough time for most investors to buy stocks because most bottoms are made when the mood is very gloomy,” he said.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
REGIONAL STABILITY: Taipei thanked the Biden administration for authorizing its 16th sale of military goods and services to uphold Taiwan’s defense and safety The US Department of State has approved the sale of US$228 million of military goods and services to Taiwan, the US Department of Defense said on Monday. The state department “made a determination approving a possible Foreign Military Sale” to the Taipei Economic and Cultural Representative Office in the US for “return, repair and reshipment of spare parts and related equipment,” the defense department’s Defense Security Cooperation Agency said in a news release. Taiwan had requested the purchase of items and services which include the “return, repair and reshipment of classified and unclassified spare parts for aircraft and related equipment; US Government
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from