The extraordinary streak on Wall Street set fresh records for blue chips over the past week, even as analysts said the frenzy may be setting the stage for a correction, or something worse.
The market faces tests in the coming week amid data on consumer inflation, industrial activity and results from companies including Wal-Mart Stores and Hewlett-Packard.
More significant, analysts say, may be whether traders will view the red-hot momentum of the market as justified after the recent streak.
"The question plaguing Wall Street is, `How high is up?'" said Larry Wachtel, chief market analyst at Wachovia Securities.
"The latest rally phase began on March 5 and so is well into its third month. Thus far the advance has shrugged off conventional technical constraints such as extreme overbought conditions," he said.
The market ended mixed for the week, showing only modest pullbacks for some shares after the remarkable string of gains since March.
The Dow Jones Industrial Average of blue chips managed a gain of 0.46 percent for the week to end Friday at 13,326.22 after notching another all-time high at midweek of 13,362.87.
The broad-market Standard & Poor's 500 index was virtually flat for the week, rising a scant 0.01 percent to end Friday at 1,505.85 as it edged toward its all-time high set in March 2000. The tech-laden NASDAQ composite lost 0.39 percent for the week to 2,562.22.
Michael Malone, analyst at Cowen & Co., said the market tone remained positive after an upbeat message from the Federal Reserve on Wednesday after the central bank left rates unchanged, and indications suggesting inflation may be easing.
But Cowen said it was unclear how much further the rally could run after the stunning gain of more than 10 percent for blue chips in the past two months.
"I'm not sure how much upside there is next week but I do think the downside is also limited, giving the very nature of this market right now," he said.
Wachtel said market has been driven by "the unprecedented global liquidity, the reasonable valuations, the buyout boom, the benign Federal Reserve and the strong earnings season."
Fred Dickson, market strategist at DA Davidson, said a key risk for Wall Street is an even more spectacular rise in Chinese shares that seems like a bubble ready to burst.
"The Shanghai Stock Market Index has now moved up nearly 30 percent beyond the peak point reached in February that caused members of the Chinese government to mutter words about capital gains restraint," Dickson said.
Dickson said the situation is reminiscent of the last spike of the NASDAQ in 2000 before that index collapsed under the weight of falling capital investment in the Internet backbone, and that the Feb. 27 meltdown may be a harbinger of things to come.
"The Shanghai index, the darling of Chinese speculators, is now up nearly 50 percent since last November and extended well past the point of irrational excitement," he said.
Bonds drifted lower for the week.
The yield on the 10-year Treasury bond rose to 4.670 percent from 4.640 percent a week earlier while the 30-year bond yield increased to 4.849 percent against 4.804 percent. Bond yields and prices move in opposite directions.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS