US equity markets ended one of their poorest weeks of the year on Friday, tumbling on the back of uninspiring economic data and troubling earnings reports from Wal-Mart Stores Inc and other retailers.
The economic picture that emerged was one of tortoise-like economic growth that might add weight to those who are urging the US Federal Reserve that it is too early to scale back its bond-buying.
However, treasury bond markets appeared to conclude that the Fed would indeed soon taper the program, driven the yield on the 10-year bond up from 2.58 percent on Aug. 9 to 2.83 percent at the end of the week. The 30-year bond also rose significantly.
Analysts cited concerns about higher yields as a factor behind the week’s declines. The Dow Jones Industrial Average suffered two days of triple-digit losses, shedding 344.04 (2.23 percent) to end at 15,081.47. The broad-based S&P 500 dropped 35.59 (2.10 percent) to 1,655.83 and the tech-rich NASDAQ Composite Index ended at 3,602.78, 57.32 (1.57 percent) lower.
The NASDAQ got a lift from news that activist investor Carl Icahn took a large stake in Apple Inc and was pressing the technology icon for a large stock buyback. Apple shares closed the week 10.5 percent higher.
A busy week of economic data had a few bright spots, such as a drop in initial jobless claims, which fell to their lowest in six years.
However, most of the other indicators gave markets little reason to smile. US consumer prices increased a scant 0.2 percent last month, while US producer price data was flat during the same period. Analysts also rued weak consumer confidence and retail sales, which rose by just 0.2 percent.
“What this week did confirm is that we’re in this very modest growth, very modest inflation period,” said Scott Wren, senior equity analyst at Wells Fargo Advisors.
Adding to the unimpressive data was a spate of earnings reports from leading retailers that showed a consistently frugal global consumer.
Wal-Mart, the world’s biggest retailer, led the pack, reporting a 0.3 percent decline in comparable store sales at its US stores due to higher payroll taxes, high gasoline prices and almost non-existent inflation.
The pattern carried to other retailers, such as high-end Nordstrom Inc, which also cut its full-year forecast, and the more mid-market Kohl’s Corp and Macy’s, which missed analyst expectations.
Wren said there is little reason to think consumers will change course quickly.
“You’re not going to get through the aftermath of a gigantic credit bubble in a year or two,” he said.
Wren said he was confident that even in the event of a near-term correction, the stock market was on track to appreciate this year and the next due to rising growth in the US and abroad.
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS