Wall Street is wilting in the summer heat, with investors increasingly uncertain about an economic and earnings recovery any time soon.
More caution is likely in the coming week with a wave of earnings reports expected that may offer hints on corporate expectations for recovery from recession.
In the week to Friday, the Dow Jones Industrial Average declined 1.62 percent to 8,146.52 and the broad-market Standard & Poor’s 500 index lost 1.93 percent to 879.13, marking four consecutive losing weeks for those indexes.
The technology-heavy NASDAQ dropped 2.25 percent over the week to 1,756.03.
Ahead of the opening, the US government said the US trade deficit narrowed sharply in May to its lowest level in nearly a decade, led by a plunge in imported oil.
The deficit fell nearly 10 percent in May to a seasonally adjusted US$26 billion, the lowest level since November 1999. The news appeared moderately positive for the US economy, but also reflected weak global trade flows.
Al Goldman, chief market strategist at Wells Fargo Advisors, said the market remains in a “correction-consolidation” phase within a trading range.
“The correction is doing what corrections do — increasing fear and frustration, decreasing glee and bullishness,” he said.
The economic outlook “has most folks confused,” Goldman said. “We believe the data suggests that the end of the recession is near — that’s the good news for investors. However, the data also appears to indicate, as we have been saying for a month, that a strong economy is not just around the corner.”
Similar views come from Stephen Auth, chief investment officer at Federated Investments.
“Our view is that an economic recovery has in fact begun, and that a second or third dip, depending on how you count the waves we’ve had since the recession began ... is unlikely but not impossible,” Auth said.
“This forecast suggests that the outlook for returns on financial assets will likely be muted, and specifically that stocks are unlikely to return to their old highs any time soon. This said, off current low levels, we do believe that the best returns investors can hope for over the next 12 to 18 months are likely to come from stocks, even if the pattern of getting there may be erratic,” he said.
Auth said the S&P 500 was likely to drift toward the 1,000 level, some 15 percent above current levels, and that “the downside is ‘protected’ by the promise of continued government economic stimulus.”
David Rosenberg, chief economist and strategist at Gluskin Sheff, warned that stock investors should not look for strong gains simply based on a forecast of an end to recession, arguing that a “sustainable expansion” is needed.
“If the lesson from the 2000-2002 cycle is any indication, calling for the recession to end is basically irrelevant,” Rosenberg said. “What matters is that the recession’s end gives way to a vigorous expansion.”
Bonds strengthened. The yield on the 10-year Treasury note fell to 3.413 percent from 3.495 percent a week earlier and that on the 30-year bond eased to 4.201 percent from 4.317 percent.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique