After a week of eye-popping gains, Wall Street is pondering whether the rebound from a vicious sell-off points to a real recovery from the economic and financial turmoil or a new “bear trap.”
Markets appear to have come to terms with the notion of a recession in the US and global economies, but the key question for traders now is whether the heavy doses of medicine from governments around the world will lead to quick recovery.
The coming week, however, will be marked by the US presidential election on Tuesday and key data, particularly from the struggling auto sector.
The Dow Jones Industrial Average showed a stunning rebound of 11.29 percent for the week, the best since 1998, led by Monday’s 10 percent surge.
But that failed to make up for the panic selling of earlier in the month, leaving the blue-chip index down a hefty 14 percent for last month and nearly 30 percent for the year.
The broad-market Standard & Poor’s 500 index vaulted 10.49 percent on the week to 968.75, but fell 17 percent last month. The technology-heavy NASDAQ composite advanced 10.88 percent to 1,720.95, but lost 18 percent in the month.
The strong gains still left the market deep in the red after one of the ugliest months in Wall Street history.
“Investors were pricing in a very severe recession, if not depression, and right now we’re going through a relief rally,” Standard & Poor’s analyst Sam Stovall said.
“Investors feel that stock prices might have overdone it to the downside,” he said.
Joachim Fels at Morgan Stanley said authorities in the US and elsewhere are taking the aggressive actions needed to stem the crisis, including interest rate cuts and moves to pump vast amounts of liquidity into the financial system.
“In our view, even highly unorthodox measures such as zero interest rates, direct central bank lending to the private sector, heavy government interference with private banks’ lending policies or large-scale bank nationalizations cannot be excluded,” Fels said.
“In short, we believe that the authorities will do whatever it takes to prevent a depression,” he said.
“While a global recession appears unavoidable, we believe that markets have gone too far in pricing in a multi-year deflationary outcome,” Fels said.
Christine Li at Economy.com said markets were more focused on central bank actions to cut rates around the world, on top of a variety of initiatives to ease a global credit squeeze.
Bonds fell over the week as investors appeared to take a bit more risk.
The yield on the 10-year Treasury bond rose to 3.970 percent from 3.697 percent a week earlier, and that on the 30-year bond increased to 4.369 percent against 4.087 percent. Bond yields and prices move in opposite directions.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique