US equities markets face an array of data this week on the state of the fragile economic recovery, which recent indicators show is hitting some fairly rough patches.
The market continues to trade in a narrow range, Michael James of Wedbush Morgan Securities said.
“The sentiment is equally balanced between those that believe the economy is trending further higher and those that believe that the economy is likely to fall from here,” he said.
In the near term, he said, the market is “slanted towards the negative side.”
The Dow Jones Industrial Average fell for the third week in a row, losing 0.66 percent over the week to close on Friday at 12,512.04 points.
The broader S&P 500 index slid 0.34 percent to 1,333.27 points, also its third week running of declines.
The NASDAQ -Composite index dropped 0.89 percent to 2,803.32 points.
The week saw a spate of disappointing indicators on the world’s largest economy, including worse-than-expected reports on industrial production, housing construction and sales of previously owned homes.
Debt concerns once again grabbed investors’ attention, with the US debt hitting its legal limit on borrowing on Monday after some lawmakers in Congress balked at raising the ceiling without cutting government spending.
In Europe, speculation mounted that Greece will have to restructure its huge debt despite a massive bailout from the EU and the IMF.
Fitch Ratings on Friday slashed Greece’s credit rating by three notches, citing the challenges of fixing the country’s finances.
Investors appeared hesitant amid growing risk, and a cautious tone was reinforced by the US Federal Reserve’s minutes of its April 26 and 27 policy-setting meeting of the Federal Open Market Committee.
The minutes revealed the committee participants’ discussions about normalizing monetary policy, which has been extremely accommodating for several years in a bid to support recovery from severe recession.
“Any time the Fed comes out and talks about exit strategy, even if that strategy may not be pursued in the immediate term, it makes the market nervous,” Gina Martin of Wells Fargo Securities said.
“We’ve certainly lost our upside momentum — you have to be fairly happy with the idea that the market has not fallen off more,” she said, adding she was “a little surprised” by the market’s resiliency.
“Investors are struggling with where else to put their money,” the analyst said. “It’s a tough call to make.”
Commodity prices have sharply fallen since the beginning of the month, and investors remain wary about the major currencies and the bond market, which is yielding tiny returns. In that context, equities have some allure.
Wall Street benefited in the middle of the week from a rebound on Wednesday in commodity prices as well as from some positive quarterly earnings, such as those from personal computer maker Dell.
Next week’s major indicators begin on Tuesday, with a report on new-home sales.
Orders for durable goods — big-ticket items expected to last at least three years — are due to land on Wednesday, followed the next day by the government’s second estimate of GDP growth in the first quarter.
According to last month’s initial estimate, GDP growth slowed to an annual pace of 1.8 percent in the January-to-March quarter from 3.1 percent in the fourth quarter of last year.
Friday brings data on consumer spending, personal incomes and pending home sales.
Experts said trading volumes could thin out ahead of a long holiday weekend. The markets will be closed on Monday next week to mark Memorial Day.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS