Wall Street has regained some of its upward momentum as investors look past the latest economic and corporate woes and pin their hopes on an easier money policy from the Federal Reserve.
Analysts say the snapback in the past week, coming on the heels of a big drop in the prior week, has been based on hopes of a rate cut on Wednesday from the US central bank and that the market remains fragile.
In the week to Friday, the Dow Jones Industrial Average gained 2.1 percent to 13,806.70, rebounding from a four percent slide the prior week.
The broad market Standard & Poor's 500 index advanced 2.31 percent to 1,535.28 and the tech-heavy NASDAQ rallied 2.9 percent to 2,804.19.
The past week was marked by signs of more turmoil in housing, with data showing a flood of unsold properties growing and existing home sales falling to fresh lows. Further troubles emerged in the financial sector with Merrill Lynch writing off some eight billion dollars in soured investments.
The market also shook off record high oil prices and fresh lows for the dollar against the euro.
But analysts say the market is looking ahead to a more friendly policy stance from the central bank, whose Federal Open Market Committee (FOMC) meets on Tuesday and Wednesday.
The Fed last month lowered its base rate by half a percentage point to 4.75 percent to ease housing and credit market stress and many market watchers expect a further reduction.
"Clearly the market will focus on Wednesday's FOMC rate and credit policy decision," said Gregory Drahuschak at Janney Montgomery Scott.
"Increasingly it has become obvious that the market wants another rate cut. The ideal that should satisfy the market is a 25 basis-point cut. More than this could generate worries that the economy is getting too weak," Drahuschak said.
Lehman Brothers economist Ethan Harris said that the Fed needed to keep cutting rates in the face of a deepening housing crisis that threatens to drag the entire economy down.
Harris predicts a cut of 25 basis points and three more cuts in the coming months to bring the federal funds rate down from the current 4.75 percent to 3.75 percent.
Bonds held firm amid the uncertain economic outlook. The yield on the 10-year Treasury bond eased to 4.389 percent from 4.401 percent a week earlier, and that on the 30-year Treasury dipped to 6.683 percent from 4.689 percent.
‘DECENT RESULTS’: The company said it is confident thanks to an improving world economy and uptakes in new wireless and AI technologies, despite US uncertainty Pegatron Corp (和碩) yesterday said it plans to build a new server manufacturing factory in the US this year to address US President Donald Trump’s new tariff policy. That would be the second server production base for Pegatron in addition to the existing facilities in Taoyuan, the iPhone assembler said. Servers are one of the new businesses Pegatron has explored in recent years to develop a more balanced product lineup. “We aim to provide our services from a location in the vicinity of our customers,” Pegatron president and chief executive officer Gary Cheng (鄭光治) told an online earnings conference yesterday. “We
It was late morning and steam was rising from water tanks atop the colorful, but opaque-windowed, “soapland” sex parlors in a historic Tokyo red-light district. Walking through the narrow streets, camera in hand, was Beniko — a former sex worker who is trying to capture the spirit of the area once known as Yoshiwara through photography. “People often talk about this neighborhood having a ‘bad history,’” said Beniko, who goes by her nickname. “But the truth is that through the years people have lived here, made a life here, sometimes struggled to survive. I want to share that reality.” In its mid-17th to
‘MAKE OR BREAK’: Nvidia shares remain down more than 9 percent, but investors are hoping CEO Jensen Huang’s speech can stave off fears that the sales boom is peaking Shares in Nvidia Corp’s Taiwanese suppliers mostly closed higher yesterday on hopes that the US artificial intelligence (AI) chip designer would showcase next-generation technologies at its annual AI conference slated to open later in the day. The GPU Technology Conference (GTC) in California is to feature developers, engineers, researchers, inventors and information technology professionals, and would focus on AI, computer graphics, data science, machine learning and autonomous machines. The event comes at a make-or-break moment for the firm, as it heads into the next few quarters, with Nvidia CEO Jensen Huang’s (黃仁勳) keynote speech today seen as having the ability to
The battle for artificial intelligence supremacy hinges on microchips, but the semiconductor sector that produces them has a dirty secret: It is a major source of chemicals linked to cancer and other health problems. Global chip sales surged more than 19 percent to about US$628 billion last year, according to the Semiconductor Industry Association, which forecasts double-digit growth again this year. That is adding urgency to reducing the effects of “forever chemicals” — which are also used to make firefighting foam, nonstick pans, raincoats and other everyday items — as are regulators in the US and Europe who are beginning to
RSS