US stocks pushed higher for the third week in a row on passable earnings, big merger announcements and rising confidence the US Federal Reserve would keep interest rates low.
Trade cooled somewhat compared with the torrid gains of the prior week, when the S&P 500 produced its biggest weekly gain this year. Nonetheless, this month’s rally remained alive and well after the first major week of third-quarter corporate earnings.
The Dow Jones Industrial Average climbed 131.48 points (0.77 percent) to 17,215.97.
The broad-based S&P 500 rose 18.22 (0.90 percent) to 2,033.11, while the tech-rich NASDAQ Composite Index advanced 56.22 (1.16 percent) to 4,886.69.
Some analysts see signs the rally is losing steam.
“The stock market is up, but you can sense that investors are becoming a little bit guarded or the market is starting to struggle,” Hugh Johnson of Hugh Johnson Advisors said.
“And I think that’s going to continue to be the case because we’re working through a very tough earnings season,” he added.
However, Marblehead Asset Management director Mace Blicksilver said the market’s performance after only mixed earnings suggests a “new bull market” could be emerging.
Investors took a sunny approach to earnings, bidding up banking shares even as Goldman Sachs and JPMorgan Chase missed analyst profit forecasts and the sector in general reported lower revenues.
Results from JPMorgan Chase, Bank of America and Wells Fargo showed lending to small businesses and consumers picked up, in a positive sign for the economy. Yet bank executives offered a muted outlook, with Bank of America chief executive Brian Moynihan remarking on “a tough revenue environment due to low interest rates and a sluggish economic recovery.”
General Electric also got a lift despite reporting lower revenues as chief executive Jeff Immelt brushed aside concerns about an industrial recession and said its business in China was “still pretty good.”
However, streaming television giant Netflix slumped after reporting disappointing new US subscriber numbers and slightly lower profits than expected in the third quarter.
The week’s ugliest reaction came in response to a Wal-Mart Stores investor presentation that projected earnings in 2017 would fall by 6 to 12 percent due to heavy investments in higher employee wages and the build-out of e-commerce infrastructure.
Wal-Mart plunged 10 percent on Wednesday after the presentation and kept dropping after that.
The Wal-Mart outlook underscored worries that the retail behemoth is a “dinosaur fighting the new economy” as embodied by Amazon and other online vendors, Meeschaert Capital Markets president Gregori Volokhine said.
Other highlights this week included two mega mergers. The US$67 billion purchase of data-storage giant EMC by computer maker Dell was the largest technology deal ever.
That was followed by the US$122 billion takeover of British brewing company SABMiller by Anheuser-Busch InBev. The deal is expected to be closely scrutinized by antitrust authorities and to result in the sale of SAB’s stake in a MillerCoors joint venture to Molson Coors.
Analysts also said gains were propelled by rising confidence the Fed would hold off on any interest rate increases in the wake of lackluster US data, including a 0.1 percent drop in US retail sales last month.
Next week’s calendar includes data on US housing starts, as well as a heavy batch of earnings from a broad range of companies, including Boeing, Coca-Cola, General Motors, Google and Microsoft.
Analysts are also looking to fresh economic data out of China, including third-quarter growth figures.
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