The ride on Wall Street has gotten bumpier over the past week as economic and credit jitters have intensified, but the stock market has managed to hold fast in the face of turbulence.
The market managed to ride out with little damage news of a government rescue of mortgage giants Fannie Mae and Freddie Mac as well as possible meltdown at investment giant Lehman Brothers.
In the coming week, a US Federal Reserve meeting will be a focal point as the market looks for assurances the central bank will continue its stimulative monetary policy.
Amid the turbulence, the market managed to end the week in positive territory.
The blue-chip Dow Jones Industrial Average rose 1.79 percent for the week to 11,421.99 and the broad-market Standard & Poor’s 500 index increased 0.75 percent to 1,251.70.
The technology-heavy NASDAQ composite eked out a gain of 0.23 percent to 2,261.27.
The resilient performance on Wall Street, some say, suggests the market is not overreacting to the latest economic and corporate woes and hoping for a possible recovery in the coming months.
“As they say, it’s always darkest before dawn,” said Avery Shenfeld, economist at CIBC World Markets. “The skies over the US economy have materially darkened in recent days, giving fodder to those who have been crying recession, and crying wolf thus far given how strong the economy proved to be this spring.”
Shenfeld said low interest, the impact of the government stimulus and a likely “bottoming” in home prices will leaded to “a 2009 sunrise.”
Mark Zandi at Economy.com agreed that the gloom may be an overreaction.
“The current tone of pessimism seems overdone,” he said. “Despite the tumult, the bottom for the housing market, financial system and economy is coming into view. The US still faces a painful slog, lasting well into 2009, but by this time next year a self-sustaining economic recovery is expected to begin.”
A bright spot for the economy is the sharp drop in energy prices, with crude oil dipping below US$100 a barrel from records above US$147 earlier this year.
This offers a variety of benefits, boosting consumer spending power and easing inflation.
“Lower energy costs, with crude oil prices off 30 percent from earlier highs, have begun to impact the economy, with the effects likely to build in coming weeks,” Bank of America economist Peter Kretzmer said.
The softer inflation will also ease pressure on the Federal Reserve, allowing the central bank to keep its stimulative base rate of 2 percent in place to nurture along a weak economy, Kretzmer added.
Bond prices were mixed. The yield on the 10-year Treasury bond fell to 3.370 percent from 3.660 percent a week earlier, and that on the 30-year bond rose to 4.326 percent against 4.276 percent. Bond yields and prices move in opposite directions.
DISCONTENT: The CCP finds positive content about the lives of the Chinese living in Taiwan threatening, as such video could upset people in China, an expert said Chinese spouses of Taiwanese who make videos about their lives in Taiwan have been facing online threats from people in China, a source said yesterday. Some young Chinese spouses of Taiwanese make videos about their lives in Taiwan, often speaking favorably about their living conditions in the nation compared with those in China, the source said. However, the videos have caught the attention of Chinese officials, causing the spouses to come under attack by Beijing’s cyberarmy, they said. “People have been messing with the YouTube channels of these Chinese spouses and have been harassing their family members back in China,”
The Central Weather Administration (CWA) yesterday said there are four weather systems in the western Pacific, with one likely to strengthen into a tropical storm and pose a threat to Taiwan. The nascent tropical storm would be named Usagi and would be the fourth storm in the western Pacific at the moment, along with Typhoon Yinxing and tropical storms Toraji and Manyi, the CWA said. It would be the first time that four tropical cyclones exist simultaneously in November, it added. Records from the meteorology agency showed that three tropical cyclones existed concurrently in January in 1968, 1991 and 1992.
GEOPOLITICAL CONCERNS: Foreign companies such as Nissan, Volkswagen and Konica Minolta have pulled back their operations in China this year Foreign companies pulled more money from China last quarter, a sign that some investors are still pessimistic even as Beijing rolls out stimulus measures aimed at stabilizing growth. China’s direct investment liabilities in its balance of payments dropped US$8.1 billion in the third quarter, data released by the Chinese State Administration of Foreign Exchange showed on Friday. The gauge, which measures foreign direct investment (FDI) in China, was down almost US$13 billion for the first nine months of the year. Foreign investment into China has slumped in the past three years after hitting a record in 2021, a casualty of geopolitical tensions,
A registered sex offender from the US who went missing after entering Taiwan has been found and would be deported in light of the risk he poses to the public, the National Immigration Agency (NIA) said yesterday. The agency launched a search for Levi Forrest Wallace, 43, after it was informed by the American Institute of Taiwan (AIT) that he had entered Taiwan on Oct. 2 on a tourist visa. He was not on the US government’s wanted list. Wallace was sentenced to 90 days in jail with a two-year probation in 2001 after he was convicted of sexual delinquency of