Wall Street may be in for another rocky week, as traders brace for negative data topped by an expected rise in the US unemployment rate that could dampen economic recovery prospects.
All eyes will turn to the release of the monthly employment data on Friday, with most analysts forecasting non-farm payroll figures for this month to fall by 118,000 and unemployment to edge up to 9.6 percent from the current 9.5 percent rate.
“The most important number by far is going to be the job numbers on Friday. It is key to the entire economy and we haven’t had very good news lately about that,” analyst Nicholas Colas of ConvergEx Group said.
Unemployment remains the biggest concern of US President Barack Obama, who is facing an uphill battle to lift the fortunes of his Democratic Party in November’s mid-term elections.
On Wednesday, analysts expect to see the monthly Institute of Supply Management (ISM) manufacturing index decline to 53.3 percent from 55.5 percent, signaling a further slowdown in manufacturing, a key pillar of the US economy.
Wall Street shares ended the week on a positive note on Friday after Federal Reserve Chairman Ben Bernanke vowed to take aggressive steps to boost the US economy if its outlook worsened.
“Bernanke was the big mover of the market, coming out and saying, ‘we’re ready to help the economy’ if needed, but he was a bit more optimistic about the outlook for the economy, boosting stocks,” FTN Financial analyst Lindsey Piegza said.
For the week, however, the Dow Jones Industrial Average lost 0.62 percent to 10,150.65 and the broader S&P 500 index dropped 0.66 percent to 1,064.59 as both indices extended a third consecutive week of losses.
The technology-rich NASDAQ composite index slumped 1.2 percent to 2,153.63 despite a growing bidding war between computer-maker giants Hewlett-Packard and Dell to buy data storage firm 3PAR.
The Fed chief also said that prospects for US growth to pick up next year appeared to remain despite the government revising downward its GDP estimate for the April-June period, saying GDP grew at 1.6 percent, less than half the first quarter’s 3.7 percent growth.
The growth plunge was on the back of a massive trade deficit and weak private inventory investment, signaling a more pronounced slowdown in recovery from recession.
Most recent economic data fell below already modest expectations and economists are reducing their growth forecast for the third quarter with some warning of a “double-dip” recession, when GDP contracts after a quarter or two of positive growth.
New home sales plunged this week to their lowest levels in half a century and the pace of orders for goods indicated the manufacturing sector slowed markedly, with business capital spending contracting massively.
Thursday’s report showing a drop in the number of Americans filing for new jobless benefits claims failed to impress traders.
“The market is very uncertain about the trajectory of the economy going into the last half of the year. The data early in the week was very unsettling as far as hoping for further growth,” Colas said.
Despite next week’s expected negative data, analysts do not predict a sharp drop in stock prices, even as Wall Street enters what is traditionally seen as a difficult month for shares.
“The bar is set pretty low given that the data has been weakening for sometime now ... It would take some pretty significant disappointment to drive us lower,” Economy.com analyst Aaron Smith said.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
RESILIENCE: Deepening bilateral cooperation would extend the peace sustained over the 45 years since the Taiwan Relations Act, Greene said Taiwan-US relations are built on deep economic ties and shared values, American Institute in Taiwan (AIT) Director Raymond Greene said yesterday, adding that strengthening supply chain security in critical industries, enhancing societal resilience through cooperation and deepening partnerships are key to ensuring peace and stability for Taiwan in the years ahead. Greene made the remarks at the National Security Youth Forum, organized by National Taiwan University’s National Security and Strategy Studies Institution in Taipei. In his address in Mandarin Chinese, Greene said the Taiwan-US relationship is built on deep economic ties and shared interests, and grows stronger through the enduring friendship between
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations