US stocks lost momentum in the past week as financial woes continued to weigh down Wall Street with investors looking ahead to a busy week of economic news.
Investors sustained fresh losses in the past week as renewed speculation swirled about the financial health of mortgage-finance giants Fannie Mae and Freddie Mac, which prop up a substantial part of the ailing US mortgage market.
The US Treasury said it was keeping an eye on the firms’ operations as some media reports suggested the government could be poised to offer substantial financial assistance to the two companies.
PHOTO: BLOOMBERG
Other media reports that said Lehman Brothers was seeking cash infusions to help bolster its balance sheet also kept the financial sector in focus on Friday.
The Dow Jones Industrial Average of 30 blue-chip stocks closed down 0.27 percent at 11,628.06 in the week to Friday, while the technology-heavy NASDAQ composite index dipped 1.55 percent to 2,414.71.
The broad-market Standard & Poor’s 500 index lost 0.46 percent to 1,292.20.
“With Fan and Fred on the brink of a Treasury bailout, crucial support to the mortgage market will be sorely tested,” said Sal Guatieri, an economist at BMO Capital Markets.
The financial sector is likely to remain in focus in the coming week after more banks reached agreements with regulators in recent days to buy back stressed auction rate securities marketed to investors before the credit crunch worsened in February.
Regulators have said their probes are continuing and analysts expect more banks to sign repurchase agreements in coming weeks.
Auction rate securities, essentially debt instruments issued by financial firms, municipalities and student loan companies, typically have a fairly lengthy maturity. But the interest rates on such securities can change at auctions run by the banks.
The repurchase agreements could further strain banks’ finances, however.
“The ensnared banks, in turn, are asking larger players in the market to redeem their long-term borrowings, which could trigger further sales of asset-backed securities. This means credit is about to get even costlier and tighter,” Guatieri said.
While the markets were mostly focused on the financial arena in the past week, several economic reports will likely grab significant attention in coming days.
Investors will receive fresh updates on the state of the housing market, consumer spending and income, consumer sentiment and a second estimate for second-quarter growth.
The US Federal Reserve is also due to release the minutes from its interest rate policy meeting earlier this month when the central bank opted to keep its key interest rate unchanged at 2 percent amid economic uncertainty and concerns about inflation.
Most economists expect existing home sales to tick up to a seasonally adjusted annualized rate of 4.9 million properties last month after sales slipped 2.6 percent to 4.86 million in the previous month.
Existing home sales have fallen more than 15 percent in the past year, underlining the continuing decline in the housing market.
“Healing in the housing market might still be a few quarters away, time that Fannie and Freddie and possibly several others in the financial industry probably don’t have,” analysts at RBC Capital Markets said in a briefing note.
Bond prices ended the week to Friday mixed. The yield on the 10-year Treasury bond rose to 3.867 percent from 3.852 percent a week earlier, while that on the 30-year bond dropped to 4.463 percent from 4.473 percent.
Bond yields and prices move in opposite directions.
‘NO SECURITY RISK’: The Railway Bureau reassured the public that the technicians’ activities were limited to technical guidance and did not involve sensitive systems The Railway Bureau yesterday said it had invited eight Chinese technicians to assist with an airport MRT construction project. The bureau issued the confirmation after an Internet user said Chinese nationals had entered the construction zone of Taiwan Taoyuan International Airport’s Terminal 3 project. They asked why “individuals from an enemy state” were allowed access to such a major national infrastructure project, which raised serious concerns over Taiwan’s industrial safety, sensitive systems and information security. The bureau’s Northern Region Engineering Branch Office said subcontractor Taiwan Handle Industrial Co (台灣手把工業) of the Taoyuan airport MRT’s “Contract No. CU05 Project A14 Station Civil, MEP &
The National Chungshan Institute of Science and Technology yesterday showcased its locally developed variants of the Vision 60 robotic patrol dog, which it plans to deploy on the nation’s outlying territories in the South China Sea. The variants were produced under the Joint Lab project — created by the institute and domestic companies — and assembled with domestically produced motors, lenses and artificial intelligence (AI) systems alongside licensed tech from the US, Missile and Rocket Systems Research Division deputy director Jen Kuo-kang (任國光) told the media event at a military base in Taipei’s Dazhi (大直) area. Taiwan has built up its strengths
NOT IMMEDIATE: Taiwan has a chance to appeal the proposed 10 percent tariff before it starts, while other countries face a 12.5 percent tariff from the trade office Taiwan is among 60 economies determined by the US to have failed to impose or enforce a ban on the importation of goods produced with forced labor, according to a notice released on Tuesday by the Office of the US Trade Representative (USTR), which proposed imposing an additional 10 percent or more tariff on them. The USTR in a statement said that following an investigation, it had determined under Section 301 of the Trade Act of 1974 that the failure of the 60 economies to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is
TIT-FOR-TAT: The US allegedly revoked the visa of a Chinese national working at Xinhua News Agency in the US in response to Beijing’s expulsion of Vivian Wang The Presidential Office yesterday condemned China for expelling a New York Times correspondent from Beijing following the newspaper’s interview with President William Lai (賴清德), saying the move highlighted Beijing’s suppression of press freedom and its threat to international news media. Taiwan has noted a series of recent incidents in which Beijing used similar tactics to “threaten and pressure international media outlets and journalists,” Presidential Office spokeswoman Karen Kuo (郭雅慧) said in a statement. “This concerns not only press freedom and freedom of expression, but also the safety of journalists, and Taiwan and relevant partners are paying close attention to the situation,” she
RSS