Wall Street stocks notched up hefty gains in the past week, setting fresh all-time highs, as investors gained confidence in the economic outlook despite mounting profit warnings from major banks.
The markets were buoyed on Friday by a monthly government report which showed improved job growth last month. The job snapshot, which showed 110,000 new jobs created last month, soothed investors fears that the economy could be facing a recession risk.
In the week to Friday, the Dow Jones Industrial Average advanced 1.21 percent to 14,066.01. The leading blue-chip index has been hovering close to a record high of 14,087.55 struck on Monday.
The broad market Standard & Poor's 500 index jumped 3.27 percent to 1,557.59, ending the week at a new record high, while the tech-laden NASDAQ soared 2.83 percent to 2,780.32.
Some analysts said the markets are still benefitting from a big cut in borrowing costs initiated by the Federal Reserve on Sept. 18 when it cuts its key federal funds short term interest rate by 0.5 percentage points to 4.75 percent.
"The market is in an uptrend," said Mace Blicksilver, a market analyst at Marblehead Asset Management. "The market is comfortable with the level of risk which is in the system."
The gains came as more banks revealed large write-downs on their market positions, particularly in mortgage-backed securities, in recent days.
Merrill Lynch & Co, Inc, a big Wall Street investment bank and brokerage, warned investors on Friday it will post a third-quarter loss because of soured bets it made on the mortgage and debt markets.
The third-quarter earnings season will start in earnest in the coming week as aluminum giant Alcoa and conglomerate General Electric reveal their latest financial results.
"Next week we'll focus mainly on the whole earnings prospects and what's going on in terms of earnings," said Marc Pado, a market analyst at Cantor Fitzgerald.
The coming week's economic diary will be relatively light, but a report on retail sales which is due to be released Friday will likely be closely watched as consumer spending accounts for some two-thirds of US economic growth.
Most economists expect retail sales for last month to strengthen to 0.5 percent, marking a gain from the 0.2 percent pace recorded in August when global markets were engulfed by a credit crunch triggered by fears over the US mortgage market.
Some analysts cautioned that corporate earnings would likely be impacted by the housing and credit woes impacting some business sectors.
"It does not appear to be a sparkling quarterly period," said Larry Wachtel, chief market analyst at Wachovia Securities.
"The comparisons will be with a strong third quarter last year, while the slowing domestic economy may slow the pace of profits. Moreover, the bottom line of many large financial companies could be impacted by the subprime [mortgage] contagion," Wachtel said.
Bond prices fell over the past week as investors shifted money into stocks.
The yield on the 10-year Treasury bond rose to 4.640 percent from 4.579 percent a week earlier, and that on the 30-year Treasury jumped to 4.871 percent against 4.833 percent. Bond prices and yields move in opposite directions.
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
CHEMICAL FIRE: 10 Indian employees were injured by smoke inhalation at a Tata Electronics plant in Tamil Nadu state that produces components for Apple Inc At least 10 people received medical treatment, with two hospitalized after a major fire on Saturday disrupted production at a key Tata Electronics Pvt Ltd plant in southern India that makes Apple Inc’s iPhone components. The fire occurred at the plant in the city of Hosur in Tamil Nadu state that makes some iPhone components. It broke out near another building inside the Tata complex, which was to begin producing complete iPhones in the coming months. The fire was contained to one building and has been extinguished fully, top district administrative official K.M. Sarayu said. No decision has been made on when
RSS