A year after the Wall Street calamity that battered the financial system and dragged the global economy into recession, investors appear to have regained their composure and are betting on recovery.
The main US indexes nearly recovered most of the losses that followed the panicked events of last September, which froze up financial markets and kept stocks on a downward track until March.
“Investors are increasingly convinced that a sustainable global recovery is emerging out of the wreckage,” said Albert Edwards, analyst at Societe Generale.
Over the week to Friday, the Dow Jones Industrial Average climbed 1.74 percent to 9,605.41, after touching an 11-month high earlier in the week.
The tech-heavy NASDAQ composite rallied 3.08 percent to 2,080.90 and the broad-market Standard & Poor’s 500 index jumped 2.59 percent to 1,042.73.
Despite the latest rebound, the main indexes are still well below their historic highs.
The blue-chip Dow is 32 percent below its all-time high of October 2007 of 14,164.53 and the S&P 500 some 33 percent short of its record of the same day of 1,565.15. The NASDAQ remains at less than half the level of the tech bubble high of 5,048.62.
This gives ammunition to both bulls and bears, fueling debate on how much further the market can run after a surge of some 50 percent from lows in early March.
“The question at this stage of the stock market advance is, if we’re in a recovery, how strong can it be?” Linda Duessel at Federated Investors said. “We very well may have a V-shaped recovery, a catalyst for the S&P 500 reaching 1,200.”
Others are less sanguine.
“People are optimistic about the third quarter, but still questioning how much is being driven by [the government] stimulus and how much is really organic, real growth that’s sustainable,” says Marc Pado, analyst at Cantor Fitzgerald.
David Rosenberg, chief economist at Gluskin Sheff & Associates and a longtime bear, says he sees “a hope-based rally in the equity markets” that flies in the face of economic fundamentals.
“What we are seeing transpire is without precedent — the magnitude of the employment slide versus the magnitude of the market advance,” he said. “The fundamentals take a back seat because there is so much liquidity to be put to work, and it all must go into equities. This reminds us of all the liquidity talk during the bubble peak of late 2007.”
Bonds rallied for the week. The yield on the 10-year Treasury bond dropped to 3.342 percent from 3.442 percent a week earlier while that on the 30-year bond declined to 4.175 percent from 4.273 percent. Bond yields and prices move in opposite directions.
In the coming week, investors will mark the one-year anniversary of the Lehman Brothers collapse that sent markets reeling. Also on tap are reports on inflation, retail sales, housing starts and industrial production.
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
Tsunami waves were possible in three areas of Kamchatka in Russia’s Far East, the Russian Ministry for Emergency Services said yesterday after a magnitude 7.0 earthquake hit the nearby Kuril Islands. “The expected wave heights are low, but you must still move away from the shore,” the ministry said on the Telegram messaging app, after the latest seismic activity in the area. However, the Pacific Tsunami Warning System in Hawaii said there was no tsunami warning after the quake. The Russian tsunami alert was later canceled. Overnight, the Krasheninnikov volcano in Kamchatka erupted for the first time in 600 years, Russia’s RIA
CHINA’s BULLYING: The former British prime minister said that he believes ‘Taiwan can and will’ protect its freedom and democracy, as its people are lovers of liberty Former British prime minister Boris Johnson yesterday said Western nations should have the courage to stand with and deepen their economic partnerships with Taiwan in the face of China’s intensified pressure. He made the remarks at the ninth Ketagalan Forum: 2025 Indo-Pacific Security Dialogue hosted by the Ministry of Foreign Affairs and the Prospect Foundation in Taipei. Johnson, who is visiting Taiwan for the first time, said he had seen Taiwan’s coastline on a screen on his indoor bicycle, but wanted to learn more about the nation, including its artificial intelligence (AI) development, the key technology of the 21st century. Calling himself an
South Korea yesterday said that it was removing loudspeakers used to blare K-pop and news reports to North Korea, as the new administration in Seoul tries to ease tensions with its bellicose neighbor. The nations, still technically at war, had already halted propaganda broadcasts along the demilitarized zone, Seoul’s military said in June after the election of South Korean President Lee Jae-myung. It said in June that Pyongyang stopped transmitting bizarre, unsettling noises along the border that had become a major nuisance for South Korean residents, a day after South Korea’s loudspeakers fell silent. “Starting today, the military has begun removing the loudspeakers,”
RSS