Amid a heady rally in anticipation of an economic rebound, Wall Street faces a gut check in the coming week with data on the US employment market expected to show still-grim conditions.
The US equity market has risen sharply for three consecutive weeks in a surprising rebound fueled in large part by upbeat corporate results and encouraging economic data, bringing the indexes to highs for this year.
Yet debate persists on whether this is a bear market rally or the beginning of a recovery for the market and the economy.
The Dow Jones Industrial Average rose 0.86 percent in the week to Friday to 9,171.61, capping a three-week gain for blue-chips of 12.5 percent and ending last month with a stunning 8.6 percent advance.
The broad-market Standard & Poor’s 500 index added 0.84 percent to 987.48 and the tech-dominated NASDAQ increased 0.64 percent to 1,978.50.
Over the first seven months of the year, the S&P is up 9.3 percent and the NASDAQ has rallied 25.4 percent, while the Dow is up a more modest 4.5 percent.
Analysts say investors are sensing better times ahead, and are putting cash back to work in the stock market.
“The stock market was deeply depressed back in March, and thus the preconditions for a rally were very much in place,” Al Goldman at Wells Fargo Advisors said.
“The economic news started to be ‘less bad’ — a nice change — but the big reason for the market rally has been corporate earnings. Second-quarter earnings have come in well ahead of projections, which increased confidence that our economy was close to the end of the recession. And lately some economic data improved from ‘less bad’ to ‘much better,’” Goldman said.
US President Barack Obama said recently he saw “the beginning of the end” of the recession, with job losses easing and many other indicators improving. A number of analysts agree.
The latest report on GDP showed a 1.0 percent annualized drop in economic activity in the second quarter. It was a fourth consecutive decline but far better than the 6.4 percent drop in the first quarter and indicated momentum may be turning.
In addition to employment figures, the coming week features data on personal income and spending and a survey of the manufacturing sector by the Institute of Supply Management.
Bonds firmed in the past week. The yield on the 10-year Treasury note eased to 3.601 percent from 3.670 percent a week earlier and that on the 30-year bond fell to 4.311 percent from 4.555 percent.
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
The Philippines yesterday criticized a “high-risk” maneuver by a Chinese vessel near the disputed Scarborough Shoal (Huangyan Island, 黃岩島) in a rare incident involving warships from the two navies. The Scarborough Shoal — a triangular chain of reefs and rocks in the contested South China Sea — has been a flash point between the countries since China seized it from the Philippines in 2012. Taiwan also claims the shoal. Monday’s encounter took place approximately 11.8 nautical miles (22km) southeast” of the Scarborough Shoal, the Philippine military said, during ongoing US-Philippine military exercises that Beijing has criticized as destabilizing. “The Chinese frigate BN 554 was
LEISURE: The new law adds Confucius’ birthday, the anniversary of the Battle of Guningtou, Constitution Day and Little New Year as national holidays The Legislative Yuan yesterday passed new legislation adding four national holidays and making Workers’ Day a national holiday for all sectors. The Chinese Nationalist Party (KMT) and the Taiwan People’s Party used their combined majority in the legislature to push the jointly proposed draft through its third and final reading. This new law supersedes the existing regulations for the implementation of memorial days and state holidays, which are administered by the Ministry of the Interior. The new law recognizes Confucius’ birthday on Sept. 28, the anniversary of the Battle of Guningtou on Oct. 25, Constitution Day on Dec. 25 and “Little New Year,”
RSS