US stocks surged this week as fears about Greece and China receded for now and strong earnings from some banks and technology companies took center stage.
The tech-rich NASDAQ Composite Index was the week’s biggest star, closing the week up a whopping 212.44 points (4.25 percent) at a record 5,210.14 behind strong earnings from Google Inc, Netflix Inc and others.
The Dow Jones Industrial Average gained 326.04 (1.84 percent) at 18,086.45, while the broad-based S&P 500 advanced 50.02 (2.41 percent) to 2,126.64.
“It was actually a terrific week,” FTN Financial chief economist Chris Low said.
“We’re actually trading on fundamentals this week,” Low said, adding that bank earnings were generally “really terrific.”
Investors breathed a sigh of relief after Greek Prime Minister Alexis Tsipras at the start of the week backed tough reforms required by creditors as a condition for beginning formal bailout talks. In subsequent days, the Greek parliament signed off on the reform measures and German lawmakers gave German Chancellor Angela Merkel the green light to negotiate a new bailout deal.
The deal removed the imminent threat of a messy Greek departure from the eurozone, although analysts said the situation remained uncertain.
“I think most of the euphoria about the latest rescue passage has worn off,” Low said. “Investors are realizing how many significant challenges remain.”
Worries about China were also back-burnered. The Shanghai Index jumped 3.51 percent on Friday, to give the market the second straight weekly gain following big drops the prior three weeks that rattled global markets.
However, as with Greece, analysts were not convinced that China was completely out of the woods. The pullback in Chinese stocks has raised worries about slowing growth in the broader Chinese economy.
The stock upturn is “a rally that has effectively been rigged by government intervention,” Briefing.com analyst Patrick O’Hare said. “The overarching point ... is that the good times rolling in the Chinese stock market at the moment are too good to be true because they are being fabricated by government control.”
Investors also took heart from two days of congressional testimony from US Federal Reserve Chair Janet Yellen, who gave a generally upbeat appraisal of the US economy as she stuck to her forecast for an increase in the Fed’s key interest rate later this year.
However, many market watchers continue to believe a rate hike is unlikely before December, a timeframe considered friendly to stock market gains.
Among the parade of earnings reports, Netflix vaulted 18 percent on Thursday to lift the NASDAQ to a record close after reporting that subscriptions jumped 3.3 million in the second quarter.
The streaming video company reported lower profits, but analysts view the stock as a must-have.
“It’s a big believers story, the way Amazon is,” Marblehead Asset Management director Mace Blicksilver said. “On growth metrics, you must own it.”
On Friday, Google lifted the NASDAQ to a second straight record after a blowout earnings report pushed the stock up 16 percent to an all-time high.
That brought the company’s full market value to about US$468 billion, a gain of US$65 billion, the biggest one-day gain in US history, according to S&P Indices.
Google reported a 2 percent rise in earnings to US$3.4 billion and gave a bullish outlook on its YouTube business, while hinting that moves to return cash to shareholders were in the horizon.
Most large banks either met or exceeded earnings forecasts. The biggest jump came at Citigroup Inc, which reported US$4.8 billion in profits, up from just US$181 million in the year-ago period when litigation costs weighed on results.
However, Goldman Sachs Group Inc saw earnings drop by almost half, to US$1.05 billion from US$2.04 billion due to a US$1.45 billion legal charge.
Next week’s calendar includes results from numerous heavyweights, including Apple Inc, Microsoft Corp, Boeing Co and General Motors Co. The schedule also includes last month’s sales of new homes and existing homes.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS