The ride on Wall Street has gotten bumpier over the past week as economic and credit jitters have intensified, but the stock market has managed to hold fast in the face of turbulence.
The market managed to ride out with little damage news of a government rescue of mortgage giants Fannie Mae and Freddie Mac as well as possible meltdown at investment giant Lehman Brothers.
In the coming week, a US Federal Reserve meeting will be a focal point as the market looks for assurances the central bank will continue its stimulative monetary policy.
Amid the turbulence, the market managed to end the week in positive territory.
The blue-chip Dow Jones Industrial Average rose 1.79 percent for the week to 11,421.99 and the broad-market Standard & Poor’s 500 index increased 0.75 percent to 1,251.70.
The technology-heavy NASDAQ composite eked out a gain of 0.23 percent to 2,261.27.
The resilient performance on Wall Street, some say, suggests the market is not overreacting to the latest economic and corporate woes and hoping for a possible recovery in the coming months.
“As they say, it’s always darkest before dawn,” said Avery Shenfeld, economist at CIBC World Markets. “The skies over the US economy have materially darkened in recent days, giving fodder to those who have been crying recession, and crying wolf thus far given how strong the economy proved to be this spring.”
Shenfeld said low interest, the impact of the government stimulus and a likely “bottoming” in home prices will leaded to “a 2009 sunrise.”
Mark Zandi at Economy.com agreed that the gloom may be an overreaction.
“The current tone of pessimism seems overdone,” he said. “Despite the tumult, the bottom for the housing market, financial system and economy is coming into view. The US still faces a painful slog, lasting well into 2009, but by this time next year a self-sustaining economic recovery is expected to begin.”
A bright spot for the economy is the sharp drop in energy prices, with crude oil dipping below US$100 a barrel from records above US$147 earlier this year.
This offers a variety of benefits, boosting consumer spending power and easing inflation.
“Lower energy costs, with crude oil prices off 30 percent from earlier highs, have begun to impact the economy, with the effects likely to build in coming weeks,” Bank of America economist Peter Kretzmer said.
The softer inflation will also ease pressure on the Federal Reserve, allowing the central bank to keep its stimulative base rate of 2 percent in place to nurture along a weak economy, Kretzmer added.
Bond prices were mixed. The yield on the 10-year Treasury bond fell to 3.370 percent from 3.660 percent a week earlier, and that on the 30-year bond rose to 4.326 percent against 4.276 percent. Bond yields and prices move in opposite directions.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS