Wall Street ended its weekly trade with sharp losses as fears of a second-dip recession struck traders’ hearts after negative data suggested a bleak outlook for the world’s biggest economy.
Friday’s trade locked four days of straight losses fueled by the US Federal Reserve’s decision on Tuesday to revive crisis-era stimulus spending to prop up the ailing US economy, whose recovery, it warned, was slowing down.
In what was the worst trading week in six weeks, the Dow Jones Industrial Average lost 3.29 percent to 10,303.15, while the technology-rich NASDAQ composite index shed 5.02 percent to 2,173.48.
The broader S&P 500 index dropped 3.78 percent to 1.079.25.
The Federal Open Market Committee (FOMC) said on Tuesday that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”
The Fed also said it would maintain its historically low interest rates between zero and 0.25 percent, but FOMC member Thomas Hoenig warned on Friday that current interest rate levels were “a dangerous gamble.”
The bank had battled the worst recession in a generation by buying up US debt, mortgage-backed securities and other financial products to lubricate markets.
The grim outlook was deepened by reports showing an unexpected rise in weekly jobless claims and that the US trade gap had widened sharply in June to its highest level in 20 months.
Figures suggesting a slowdown in the Chinese economy further compounded fears about the pace of the global recovery from the worst recession in decades.
Positive earnings reports from entertainment giant Walt Disney and department store chains Macy’s and Kohl’s failed to improve gloomy sentiments on Wall Street.
Shares in Cisco Systems took a heavy beating, pulling the NASDAQ down, as it lost more than 11 percent over the past week alone, after the Internet communications giant reported a disappointing profit and issued a cautious forecast.
“Early in the week, the market was hit by a one-two punch of a gloomier than expected FOMC report as well as weaker than expected data from China,” said Sam Stovall, an analyst at Standard and Poor’s. “In general, people are worried that the macro economic data is now overtaking the euphoria that we had gotten from second quarter earnings.”
Next week is likely to continue the low-volume trade with the monthly producer price index and industrial production reports set to show a timid improvement from the previous month, Stovall said.
Eyes will also be focused on the housing market with the release of the housing market index tomorrow and the housing starts reports on Tuesday, as investors seek to feel the market pulse.
“We’re basically scratching our heads ... but I would tend to say that economic reports next week will probably be more encouraging than the other way around,” Stovall said.
Furthermore, several companies will release their quarterly results, including the world’s largest retailer Walmart and PC manufacturer Dell, which seeks to recover from a volatile week affected by low forecasts in the global computer market.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft