International Markets: New York: A case of the holiday blues
Sunday 21 December 1997
Such companies as footwear giant Nike and investment bank JP Morgan disappointed investors last week by reporting weak earnings or warning that profits would fall short of estimates. Both companies cited adverse conditions in Asia for the shortfall.
The first sign that turmoil in Asian economies would be more than a blip on the radar screen for the US stock market came in late October, when the Dow Jones Industrial Average took a one-day 554-point tumble. Last week markets in Japan and Hong Kong slumped again on fears of more bankruptcies.
The volatility caused by weakness in Asia may be heightened this week by a dearth of trading activity. In the past three years, the volume of shares traded on the New York exchange during Christmas week has been 30 per cent below its yearly average.
The Dow industrials fell 82.01 points, or 1 per cent, to 7,756.29 last week. The Standard & Poor's 500 fell 0.7 per cent. The two worst-performing stocks in the S&P 500 this month are Cabletron Systems and Oracle, down 40 per cent and 33 per cent respectively.
The US stock market may be the victim of its own success. Share prices have more than doubled in the last three years, probably reflecting all the good news to come.
"The market can't afford any disappointments," said Jeff Petherick, a money manager in Loomis Sayles. "But what usually undoes the US stock market is rising interest rates, and we're not seeing that right now."
The yield on the benchmark 30-year Treasury bond fell as low as 5.86 per cent on Friday, down from 6.64 per cent when the year began.
The slide in yields came after the Federal Reserve declined to raise the federal funds rate from its current 5.5 per cent at a meeting on Tuesday. Bonds were also helped by tumbling world stock markets.
"The economic slowdown in Asia will help relieve inflationary pressures so that the Fed won't raise interest rates in 1998," said Art Bonnel, manager of the $100m Bonnel Growth Fund. "In fact, it's more likely we'll see a decrease in rates next year."
The US stock market tends to get a case of earnings jitters at this time every quarter, so investors shouldn't attach too much importance to the market's recent woes, said Jack Shaughnessy, president of Boston Security Counsellors.
It is, after all, the holiday season.
Copyright: IOS & Bloomberg
- 1 Crystal meth addict 'gouged out his eyes and ate them' while high on drug, Australian MP claims
- 2 Saudi Arabia 'seeking to head United Nations Human Rights Council'
- 3 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 4 Witch doctor arrested after forcing newborn baby to walk in Indian village
- 5 Arsenal fan asks the Queen for tickets to the FA Cup final - gets a reply from Buckingham Palace
Ireland's same-sex marriage vote: Dublin in party mood ahead of historic poll result
Saudi Arabia 'seeking to head United Nations Human Rights Council'
Toddler throws a tantrum at the White House – in front of Barack Obama
Irish people are travelling home from all over the world so they can vote to legalise gay marriage
Witch doctor arrested after forcing newborn baby to walk in Indian village
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...