Oil prices and energy companies on Friday rallied after OPEC said it would produce more oil, but not as much as investors feared. While trade tensions remained in the headlines, US stocks finished slightly higher at the end of a bumpy week.
US crude futures jumped 4.6 percent after OPEC nations agreed to produce about 1 million additional barrels of oil per day.
Investors have expected an increase in production for weeks and many of them thought a bigger boost was coming, which would have sent prices lower.
While prices usually go down when oil production rises, investors thought OPEC might take a bigger step based on reports over the past few weeks.
“People were pricing crude in the last couple of weeks [expecting] a bigger increase by OPEC than what they agreed to,” Leuthold Group LLC chief investment strategist Jim Paulsen said.
Exxon Mobil Corp picked up 2.1 percent to US$81.38 and Marathon Oil Corp surged 7.8 percent to US$21.48.
Healthcare and household goods companies also rose, while technology companies and banks fell.
The EU followed through on its promise to put import taxes on US$3.4 billion of US goods, including bourbon, peanut butter and orange juice, in response to US tariffs on steel and aluminum.
Automakers were jolted after US President Donald Trump threatened to put a 20 percent tax on cars imported from Europe, although none of them took big losses.
The S&P 500 on Friday added 5.12 points, or 0.2 percent, to 2,754.88, but fell 0.9 percent from 2,779.66 on June 15.
The Dow Jones Industrial Average on Friday broke an eight-day losing streak, gaining 119.19 points, or 0.5 percent, to 24,580.89, but that was still a drop of 2 percent from a close of 25,090.48 on Friday last week.
Among the loss leaders, Boeing Co fell 5.3 percent and Caterpillar dropped 6.7 percent, both companies’ biggest losses in three months.
Makers of chemicals and other basic materials like 3M Co also lost ground this week and technology companies slipped.
The NASDAQ Composite on Friday fell 20.13 points, or 0.3 percent, to 7,692.82, shedding 0.7 percent from 7,746.38 a week earlier.
The Russell 2000 index of smaller-company stocks sank 3.37 points, or 0.2 percent, to 1,685.58, edging up 0.1 percent from a close of 1,683.91 on June 15.
The EU is enforcing tariffs on US$3.4 billion of US products in retaliation for duties the administration of US President Donald Trump has put on European steel and aluminum. The taxes are on US products that appear designed to create political pressure on Trump and senior US politicians.
EU authorities had said the move was in response to the US import duties.
On Twitter, Trump threatened to impose a 20 percent tax on cars imported from the EU if barriers to trade are not removed soon.
He had previously ordered the Office of the US Trade Representative to look into possible tariffs or quotas on imported cars and auto parts.
“If you’re in the direct line of fire from a tariff, it’s hugely important,” Paulsen said, but added that investors are very skeptical that a damaging trade war will break out.
“The trade war has heated up over the last couple of months and yet stocks are up over that period of time,” he said.
That was also the case on Friday.
Open-source software maker Red Hat Inc dropped 12.4 percent to US$142.14 after it cut its sales forecasts due to the strengthening US dollar. Other technology companies also declined.
The industry has been leading the market for more than a year, but it makes more of its sales outside the US than any other major S&P 500 sector.
Micron Technology Inc fell 3.9 percent to US$57.10 and Nvidia Corp lost 2.4 percent to US$250.95.
Additional reporting by staff writer
MediaTek Inc (聯發科) yesterday announced it would give incentive bonuses totaling NT$1.7 billion (US$59.7 million) to its employees and those at the firm’s major subsidiaries, after the smartphone chip supplier’s revenue hit US$10 billion last year. This is the biggest incentive bonus the Hsinchu-based handset chip designer has ever distributed in its 23-year history. About 17,000 full-time employees of MediaTek and five of its subsidiaries, including Richtek Technology Corp (立錡科技) and Airoha Technology Corp (絡達科技), would receive a “red envelope” of NT$100,000 each, the company said. “Surpassing US$10 billion is just the beginning. We will continue to [grow] on this basis,” MediaTek
TO SPUR REVENUE: The contract chipmaker expects its profit to grow 15 percent this year, outpacing the foundry industry’s projected advance of about 10 percent Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its projected capital spending for this year by 62 percent, a new high, in an attempt to satisfy customer demand for advanced technologies in the production of central processing units, high-performance-computing (HPC) devices and 5G applications. After investing US$17.24 billion last year, TSMC this year plans to spend US$25 billion to US$28 billion on manufacturing equipment and new facilities, including a fab in the US. About 80 percent of the budget would be allocated for developing advanced technologies including 3, 5 and 7-nanometer technologies, the company said. The larger-than-expected capital spending prompted speculation
CHINESE TIE-UP: The firm said its services with Zhejiang Geely would be related to vehicles, parts, intelligent drive systems and automotive ecosystem platforms Apple Inc’s local manufacturing partner Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) outside of Taiwan, is setting up a vehicle venture, strengthening its automotive capabilities at a time when technology companies, including its California ally, are looking to expand in automaking. Hon Hai is joining forces with Chinese automaker Zhejiang Geely Holding Group Co (浙江吉利控股集團) to provide production and consulting services to global automotive enterprises, the companies said in a statement yesterday. The production and consulting services are related to whole vehicles, parts, intelligent drive systems and automotive ecosystem platforms, Hon Hai said in a filing with
RECORD BUDGET: TSMC does plan to raise its proposed capital expenditure a lot, and could benefit if Intel outsources more of its production to foundries, analysts said Intel Corp’s earnings conference call on Thursday is expected to clarify the US semiconductor giant’s outsourcing production plans, which would be crucial regarding Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) performance, analysts said. “TSMC stands to benefit if Intel outsources more of its fabrication to foundries,” SinoPac Securities Investment Service Corp (永豐投顧) analysts said in a note on Friday. Yuanta Securities Investment Consulting Co (元大投顧) was more cautious, saying that Intel’s contribution initially would be limited, but its outsourcing plans would still highlight TSMC’s leadership in technology, it added. “Intel will continue to manufacture server or high-end central processing units [CPUs], which have higher