The strong run for Wall Street has ended, but analysts say the backdrop remains positive and that the year-end rally could continue.
After a remarkable winning streak from mid-October, the main indexes were mixed over the past week.
The Dow Jones Industrial Average, which flirted with 11,000 but failed to break through the barrier, fell 0.49 percent in the week to 10,877.51.
The broad-market Standard and Poor's 500 index dipped 0.26 percent to 1,265.08.
The tech-heavy NASDAQ composite index managed a gain of 0.46 percent to 2,273.37.
The mixed performance came despite economic reports that were surprisingly strong.
The latest revision of US economic growth for the third quarter showed a robust 4.3 percent growth pace, and factory activity held firm based on the Institute of Supply Management survey.
In terms of payroll growth, seen as one of the best indicators of economic momentum, data showed the US economy churned out 215,000 jobs last month, more evidence of the recovery from devastation of hurricanes Katrina and Rita.
But analysts said the market had been largely anticipating the solid economic news and needed to pause.
Eugene Peroni at Claymore Research said a breather was expected after last month's spectacular gains -- around 3.4 percent for the broad market.
"I am not calling for a market reversal. Far from it," Peroni said.
"November's gains have a foundation of months of base-building activity in a trading range. I simply believe that, at these levels, the market is near-term vulnerable to external events or disappointments," he said.
Peroni said the 11,000 mark for the Dow "may be elusive near-term," but that "it may be only a matter of time -- little time, perhaps -- before 11,000 is overcome."
Dick Green at Briefing.com said he believes the year-end lift may not be over.
"There may not be too much left in this rally, but a positive tone is likely to continue through year-end," he said.
"The rally is supported by fundamentals. Economic growth remains strong and the impact from hurricane Katrina is now largely past. Energy prices are declining and gasoline prices are actually below pre-Katrina levels. The only real concern is inflation, and it will be the key to whether the stock market will do well in 2006," Green said.
Bob Doll, chief investment officer at Merrill Lynch, remained somewhat cautious, saying "there is still some risk that stock prices could decline as weaker economic growth undermines corporate earnings expectations, which we believe remain too high."
"In our opinion, the markets still need to weather a period of disappointing corporate earnings growth, as expectations need to be ratcheted down for 2006," he added.
Analysts said that despite the recent gains, the stock market could move higher because valuations remain attractive and economic growth is strong.
"The combination of better-than-expected earnings in 2005 and a relatively flat stock market has resulted in improved valuation levels for stocks," Doll said.
"Unless we see further significant increases in interest rates, these improved valuation levels should, at a minimum, create a floor for the markets," he said.
Bonds fell over the past week. The yield on the 10-year bond increased to 4.519 percent from 4.474 percent a week earlier and the 30-year bond rose to 4.717 percent from 4.664 percent. Bond yields and prices move in opposite directions.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his