US stocks closed out a buoyant month with a fresh record for the S&P 500, as bullish sentiment dominated trade despite mediocre economic data and rising tensions over the Ukraine.
The S&P 500 was the week’s star, notching consecutive records on Thursday and Friday to finish the week up 23.2 points, or 1.26 percent, at 1,859.45. The Dow Jones Industrial Average also gained this week, rising 218.41 points (1.36 percent) to close at 16,321.71, while the tech-rich NASDAQ Composite Index tacked on 44.71 (1.05 percent) to end on 4,308.12.
Last month, the Dow jumped 3.97 percent — its biggest monthly gain since January last year —while the S&P 500 rose 4.31 percent and the NASDAQ powered up 4.98 percent.
Investor enthusiasm returned last month after the Dow fell 5.3 percent in January.
“The US is the place to be in terms of stocks,” Wells Fargo Advisors senior equity strategist Scott Wren said.
Wren this week bumped his year-end forecast for the S&P 500 up on expectations of “modest,” but “dependable” growth in the US.
The week’s gains underscored the strong appetite for stocks even as tensions rose over turmoil in the Ukraine, Meeschaert Capital Markets president Gregori Volokhine said from New York.
Volokhine described the situation as potentially “explosive geopolitically” because of the possibility that the US could take “economic action” against Russia over the crisis-hit country.
Investors also shrugged off another round of mostly disappointing economic data that included a big reduction in the US Department of Commerce’s estimate for fourth-quarter economic growth from 3.2 to 2.4 percent.
However, analysts said investors view GDP data and other weak indicators as resulting partly from extremely cold weather that has depressed economic activity recently.
US Federal Reserve Chair Janet Yellen took this stance, telling a US Senate panel that “unseasonably cold weather has played some role” in many of the lackluster economic statistics released over the past four to six weeks.
Analysts said Yellen’s testimony confirmed that while the Fed continues to scale back its stimulus program, it has no intention of raising interest rates anytime soon.
Yellen “restated that the Fed is very likely to keep interest rates at a very low level for the foreseeable future,” Hugh Johnson Advisors chairman Hugh Johnson said..
Major corporate news this week included earnings reports from leading retailers Best Buy Co Inc, Macy’s Co and Home Depot Inc, all of which rallied following the releases.
One of the most anticipated reports came from Target Corp, which in December last year disclosed that credit card data for about 40 million of its customers had been stolen by hackers in one of the biggest data breaches in history.
Target said its fourth-quarter earnings fell 45.9 percent last year because of lower consumer traffic after it disclosed the breach. It also warned that its full-year earnings for this year could be hit by costs from the data breach.
Nevertheless, Target shares rallied after the report because of relief that it was not worse.
Shares of another problem-plagued retailer, JC Penney, also soared after the firm projected that it would see “mid-single-digit” growth in same-store sales this year.
Ripples from several high-profile shareholder activist battles also garnered headlines. Billionaire Carl Icahn engaged in an escalating war of words with eBay Inc, while Dan Loeb announced plans for a proxy battle to win three board seats at Sotheby’s and PepsiCo again rejected calls from activist Nelson Peltz to spin off its North American beverage business.
With most corporate earnings complete, next week’s calendar will be dominated by economic reports.
The schedule includes data on the US trade balance and construction spending and culminates with the monthly jobs report for last month on Friday.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
RESHAPING COMMERCE: Major industrialized economies accepted 15 percent duties on their products, while charges on items from Mexico, Canada and China are even bigger US President Donald Trump has unveiled a slew of new tariffs that boosted the average US rate on goods from across the world, forging ahead with his turbulent effort to reshape international commerce. The baseline rates for many trading partners remain unchanged at 10 percent from the duties Trump imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet his move to raise tariffs on some Canadian goods to 35 percent threatens to inject fresh tensions into an already strained relationship, while nations such as Switzerland and New Zealand also saw increased
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