US stocks managed to chalk up back-to-back weeks of gains for the first time in 10 months after the US Federal Reserve provided an unexpected boost to sentiment with an aggressive move to pump up liquidity.
But with investors locking in profits on Friday amid waning enthusiasm over the central bank’s decision to inject another US$1 trillion into the financial system to prop up the economy, analysts said the market was expected to remain cautious.
Over the week, the Dow Jones Industrial Average of 30 blue-chips added 0.75 percent to end at 7,278.38 — the first back-to-back weekly gains since May last year — despite two consecutive solid days of red ink on on Thursday and Friday.
The technology-heavy NASDAQ composite rose 1.8 percent to 1,457.27, while the broad-market Standard & Poor’s 500 Index was up 1.58 percent to 768.54 for the week.
“As the market has already experienced two periods of panic selling — late November and early March — we believe the downside risk is limited,” Wachovia Securities chief market strategist Al Goldman said amid increasing investor optimism about the global economy.
Investors are at their most optimistic about the global economy since December 2005, according to the Merrill Lynch Survey of Fund Managers for this month, although a prolonged banking crisis seems to be stopping them from putting cash into equities.
US share prices rose the past week after fresh data showed new US home construction and building permits saw a surprise jump last month from 50-year low levels in a positive sign for the moribund home market at the epicenter of the global financial crisis.
The market turned more buoyant after US Federal Reserve Chairman Ben Bernanke made a surprise announcement on Wednesday on buying up to US$300 billion in Treasury bonds and an additional US$850 billion in other debt in a bid to cut lending costs and fire up the sluggish economy.
But the enthusiasm died down by the end of the week as investors feared that the move carried a huge inflation risk as the more than US$1 trillion in new money might have to be paid for one way or the other, through taxes or higher inflation.
“One conclusion is that the Fed is simply printing money to provide liquidity. By definition this action is always inflationary,” Fred Dickson of DA Davidson & Co said. “What remains to be seen is how long it will take to show up in the prices consumers and businesses pay for goods.”
Although the market is not expecting any bombshells the coming week, it may have to contend with some weak economic numbers.
“We are expecting, however, another string of dismal economic reports,” IHS Global Insight economists said in a report.
They said all indicators pointed to another plunge in existing home sales for last month even if new home sales could stage a modest rebound from an all-time low in January.
A US economic contraction, at 6.2 percent the last quarter, could also be revised to show an even larger drop, the IHS Global Insight report said, forecasting 6.7 percent against an analysts consensus of 6.6 percent.
COMBINING FORCES: The 66th Marine Brigade would support the 202nd Military Police Command in its defense of Taipei against ‘decapitation strikes,’ a source said The Marine Corps has deployed more than 100 soldiers and officers of the 66th Marine Brigade to Taipei International Airport (Songshan airport) as part of an effort to bolster defenses around the capital, a source with knowledge of the matter said yesterday. Two weeks ago, a military source said that the Ministry of National Defense ordered the Marine Corps to increase soldier deployments in the Taipei area. The 66th Marine Brigade has been tasked with protecting key areas in Taipei, with the 202nd Military Police Command also continuing to defend the capital. That came after a 2017 decision by the ministry to station
‘INVESTMENT’: Rubio and Arevalo said they discussed the value of democracy, and Rubio thanked the president for Guatemala’s strong diplomatic relationship with Taiwan Guatemalan President Bernardo Arevalo met with US Secretary of State Marco Rubio in Guatemala City on Wednesday where they signed a deal for Guatemala to accept migrants deported from the US, while Rubio commended Guatemala for its support for Taiwan and said the US would do all it can to facilitate greater Taiwanese investment in Guatemala. Under the migrant agreement announced by Arevalo, the deportees would be returned to their home countries at US expense. It is the second deportation deal that Rubio has reached during a Central America trip that has been focused mainly on immigration. Arevalo said his
‘SOVEREIGN AI’: As of Nov. 19 last year, Taiwan was globally ranked No. 11 for having computing power of 103 petaflops. The governments wants to achieve 1,200 by 2029 The government would intensify efforts to bolster its “Sovereign Artificial Intelligence [AI]” program by setting a goal of elevating the nation’s collective computing power in the public and private sectors to 1,200 peta floating points per second (petaflops) by 2029, the Executive Yuan said yesterday. The goal was set to fulfill President William Lai’s (賴清德) vision of turning Taiwan into an “AI island.” Sovereign AI refers to a nation’s capabilities to produce AI using its own infrastructure, data, workforce and business networks. One petaflop allows 1 trillion calculations per second. As of Nov. 19 last year, Taiwan was globally ranked No. 11 for
Israel yesterday said it has begun preparations for the departure of large numbers of Palestinians from the Gaza Strip in line with US President Donald Trump’s plan for the territory, while Egypt has launched a diplomatic blitz behind the scenes to try and head off the plan. The Trump administration has already dialed back aspects of the proposal after it was widely rejected internationally, saying the relocation of Palestinians would be temporary. US officials have provided few details about how or when the plan would be carried out. Trump yesterday said that Israel would turn Gaza over to the US after the