Wall Street’s hopes for a rapid recovery from recession, muddled by disappointing US labor market data, faces a new test in the coming week with the looming corporate earnings season.
The market was hammered by news of steeper-than-expected US job losses in the past month, which dampened hopes of a quick recovery, putting the earnings season in the spotlight for investors. In the holiday-shortened week to Thursday, the Dow Jones Industrial Average slumped 1.87 percent to 8,280.74, a third consecutive loss for blue-chips.
The broad-market Standard & Poor’s 500 index slumped for a third week, losing 2.45 percent to 896.42, while the technology-heavy NASDAQ lost 2.27 percent over the four-day week to 1,796.52.
The market had been on a positive track for the week until Thursday’s shock data showed a disappointing 467,000 jobs lost last month — far worse than expected and a reversal of the improving trend from May.
The report dashed hopes that had been growing for an early recover to the recession that has gripped the world’s biggest economy since December 2007.
“For all the talk of an impending US economic recovery, June’s worse than expected nonfarm payroll report highlights that the current recession lives on,” said Meny Grauman, an economist at CIBC World Markets.
“The outlook for the US economy remains decidedly negative despite a slew of better than expected economic data. Not only are monthly payroll declines still in the triple digits, but earnings are growing very slowly, and hours worked are being cut back,” Grauman said.
Grauman said the weakness in the job market will hurt incomes, leading to sluggish spending and overall economic activity.
Others say a single report should not detract from what appears to be a stabilization in the economy, highlighted by improving trends in manufacturing and spending.
“We need to take stock for a minute and ask whether this was a reversal in the downward trend in payroll losses or just a hiccup in the process of stabilizing the job market,” Joel Naroff at Naroff Economic Advisors said.
“I have always argued that one month a trend does not make and that is the case with this data. But the employment reductions have to slow soon if the economy is to start to rebound,” Naroff said.
Philip Orlando at Federated Investors said the data “clearly was a step in the wrong direction for the recovery of both the economy in general and the employment market in particular.
“We continue to believe that January 2009 remains the trough of the current jobs cycle,” with a loss of 741,000 jobs, Orlando said. “We are also sticking to our controversial, out-of-consensus belief that the economy likely bottomed during the just-completed second quarter, and we are still forecasting a resumption of positive gross domestic product growth in the second half of calendar 2009. But today’s jobs report was undoubtedly a black eye for our forecast.”
Bonds ended the week mixed. The yield on the 10-year Treasury note fell to 3.495 percent from 3.506 percent a week earlier and that on the 30-year bond edged up to 4.317 percent from 4.303 percent. Bond yields and prices move in opposite directions.
The coming week sees the first of the blue-chips, Alcoa, reporting earnings on Tuesday, and a survey on the US services sector from the Institute of Supply Management.
‘HERO OF THE ERA’: President Tsai Ing-wen expressed deep sadness at Lee’s passing, and told the government to assist his family with all their needs Former president Lee Teng-hui (李登輝) passed away at 7:24pm yesterday at Taipei Veterans General Hospital. He was 97 years old. The hospital stated the cause of death as septic shock and multiple organ failure. Lee had been hospitalized there since February, when he choked on a mouthful of milk at home. He was later diagnosed with pulmonary infiltrates and aspiration pneumonia. The hospital said that Lee had been treated with antibiotics, but that his health had not improved, as his advanced age and diabetes had inhibited his immune system and led to recurring infections. During his hospitalization, Lee underwent daily kidney dialysis, which removed
‘WEAK POSITIVE’: The man arrived in Taiwan in May and was quarantined for two weeks, Chen Shih-chung said, adding that he might be infected a long time ago The government is considering tightening mask-wearing rules again in light of a potential domestic COVID-19 infection, Minister of Health and Welfare Chen Shih-chung (陳時中) said yesterday. The Central Epidemic Command Center (CECC) confirmed seven new COVID-19 cases, six of which are imported. The other case involves a Belgian engineer who entered Taiwan on May 3 and remained in quarantine until May 17, said Chen, who heads the CECC. Although the source of infection has yet to be identified, the case could end the nation’s record of not having any domestic cases in the previous 110 days. The Belgian, in his 20s, is a technician
RECEIVING TREATMENT: President Tsai Ing-wen, Vice President William Lai and Premier Su Tseng-chang visited former president Lee Teng-hui yesterday morning Taipei Veterans General Hospital yesterday rebutted speculation that former president Lee Teng-hui (李登輝) had died a day earlier, saying that he was weak, but receiving treatment. The hospital said the 97-year-old Lee was not in good condition and needed ongoing care, adding that if there are any changes in his condition, it would make those public. The comments came after rumors emerged online on Tuesday that Lee had died after being hospitalized since early February. Soon after the unsubstantiated rumors emerged, reporters started flocking to the hospital seeking confirmation. Lee was admitted to Taipei Veterans General Hospital on Feb. 8 after choking while drinking
ROAD TO HISTORY: When Lee Teng-hui joined the KMT, the likelihood of a Taiwanese becoming ROC president, much less its first directly elected one, was hard to imagine Lee Teng-hui (李登輝), who was born on Jan. 15, 1923, in the farming community of Sanshi Village, Taihoku Prefecture — now New Taipei City’s Sanzhi District (三芝) — during the Japanese colonial era, and rose to become mayor of Taipei and not only the Republic of China’s (ROC) first Taiwan-born president, but its first directly elected one as well. Educated in the Japanese educational system of the time, Lee, who spoke Japanese, Hoklo (also known as Taiwanese), Mandarin and English, won a scholarship to Kyoto Imperial University, but his studies were interrupted by World War II. He earned a bachelor’s