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Los Angeles Times
15-05-2025
- Business
- Los Angeles Times
Wall Street drifts back within 4% of its record after the S&P 500 notches a 4th straight gain
NEW YORK — Most U.S. stocks drifted higher in quiet trading Thursday following a jumble of mixed reports that offered little clarity on how the U.S. economy is managing through President Trump's trade war. The Standard and Poor's 500 rose 0.4%, enough to extend its winning streak to a fourth day and to pull within 3.7% of its all-time high set earlier this year. The Dow Jones Industrial Average added 271 points, or 0.6%, and the Nasdaq composite slipped 0.2%. Stocks got a lift from easing Treasury yields in the bond market. They fell after the economic reports suggested the Federal Reserve may have more room to cut interest rates later this year to bolster the U.S. economy if it weakens under the weight of high tariffs. But the reports did little to spell out whether the economy is falling toward a recession, as many investors had been fearing, or shaking off the uncertainty after Trump called off many of his tariffs temporarily. The headliner reports said shoppers spent less at U.S. retailers last month than expected, while inflation was better at the wholesale level than economists forecast. Other updates said U.S. manufacturing looks like it's still contracting but fewer U.S. workers are applying for unemployment benefits than expected. Even though China and the United States recently agreed on a 90-day stand-down for many of their tariffs, 'the trade story isn't over, and it's still going to take time for tariffs to make themselves felt in economic data,' according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. Such uncertainty showed itself in Walmart's stock, which slipped 0.5% even though it reported a bigger profit for the latest quarter than analysts expected. Like other U.S. companies struggling through Trump's on-again-off-again rollout of tariffs, Walmart said it decided not to offer a forecast for how much profit it will make in the current quarter. Chief Financial Officer John David Rainey pointed to 'the range of near-term outcomes being exceedingly wide and difficult to predict,' though the company did say it expects sales to grow between 3.5% and 4.5%, not including the swings that shifting values of foreign currencies can bring. The nation's largest retailer also said that it must raise prices due to higher costs caused by Trump's tariffs. Equipment maker Deere said it's seeing 'near-term market challenges' and called the situation 'dynamic,' as many other companies have. It lowered the bottom end of its forecasted range of profit for the full year. But Deere's stock nevertheless rose 3.8% after it reported a stronger profit for the latest quarter than analysts expected. Cisco Systems was another winner and rose 4.8% after the tech giant likewise topped expectations for profit. Analysts said they're optimistic about Cisco's artificial-intelligence prospects. Elsewhere on Wall Street, Dick's Sporting Goods tumbled 14.6% after it said it would buy the struggling Foot Locker chain for $2.4 billion. Dick's also said that it made a better profit for the latest quarter than analysts expected. Foot Locker soared 85.7% after coming into the day with a loss of nearly 41% for the year so far. All told, the S&P 500 rose 24.35 points to 5,916.93. The Dow Jones Industrial Average added 271.69 to 42,322.75, and the Nasdaq composite fell 34.49 to 19,112.32. In the oil market, crude prices sank roughly 2% on expectations that more petroleum could be set to flow into global markets because of a possible deal between the United States and Iran over that country's nuclear program. Such a deal could help ease sanctions against Iran, which is a major producer of oil. Elsewhere, China moved to reverse some of its 'non-tariff' measures against the U.S. as agreed with Washington in their temporary trade war truce, while demanding that the U.S. side 'immediately correct its wrong practices.' A Chinese Commerce Ministry spokesperson accused the Trump administration of violating world trade rules by announcing that use of Ascend computer chips made by China's Huawei Technologies violates U.S. export controls. Stock indexes fell 0.8% in Hong Kong and 0.7% in Shanghai, while indexes were mixed elsewhere in Asia and Europe. In the bond market, the yield on the 10-year Treasury fell to 4.44% from 4.53% late Wednesday. Falling bond yields can encourage investors to pay higher prices for stocks and other investments. The two-year Treasury yield, which more closely tracks expectations for Fed action, dropped to 3.96% from 4.05% as traders built bets that the Fed will resume cutting its main interest rate as soon as September. The Fed has been keeping its main interest rate on hold this year as it waits to see how Trump's trade policies play out for the economy. Cutting rates would juice the economy by making it easier for U.S. households and companies to borrow and spend. But it would also push upward on inflation when worries are high that Trump's tariffs will do the same thing. Fed Chair Jerome Powell warned in a speech on Thursday that the world 'may be entering a period of more frequent, and potentially more persistent, supply shocks' that could goose inflation higher and present a 'difficult challenge for the economy and for central banks.' Choe writes for the Associated Press.
Los Angeles Times
13-05-2025
- Business
- Los Angeles Times
Wall Street rises again as the S&P 500 erases its loss for 2025
NEW YORK — Most U.S. stocks rose Tuesday following an encouraging report that showed inflation unexpectedly slowed across the country last month. The Standard and Poor's 500 climbed 0.7%, coming off an even bigger gain to start the week after the United States and China announced a 90-day pause in their trade war to allow for negotiations. The Dow Jones Industrial Average fell 269 points, or 0.6%, and the Nasdaq composite jumped 1.6% as AI and other tech stocks led the way. Stocks have been roaring back since the S&P 500 fell nearly 20% below its record last month on hopes that President Trump will ease his stiff tariffs on trading partners worldwide before they create a recession and send inflation spiking higher. The S&P 500, which sits at the center of many 401(k) accounts, is back within 4.2% of its all-time high set in February and positive again for the year so far. Tuesday's report said that even with all the uncertainty around trade, and even with many businesses rushing to import products from other countries before tariffs raise their prices, inflation slowed to 2.3% last month from 2.4% in March. It's encouraging because such data pulls the economy further from a worst-case scenario called 'stagflation,' one where the economy stagnates but inflation remains high. The Federal Reserve has no good way to fix that toxic combination. It could try to lower rates to help the economy, for example, but that would likely worsen inflation in the short term. Even with Tuesday's encouraging report, though, economists and analysts say inflation may still run higher in coming months because of Trump's tariffs. That will likely leave the Fed waiting for more data to guide their decision on whether and when to cut interest rates in order to help the economy. It's similar to the wait that investors in general are enduring. With the Fed set to make no moves on interest rates for the time being, markets will likely trade 'with negotiation and reconciliation headlines,' according to Alexandra Wilson-Elizondo, global co-head and co-chief investment officer of multi-asset solutions within Goldman Sachs Asset Management. 'I think investors are aware that the trade deal is not done yet,' said Louis Wong, director for Phillip Securities Group in Hong Kong. 'I would advise investors to remain cautious in the near term and to be prepared for unexpected news from the trade front,' he added. On Wall Street, Coinbase Global jumped 24% after the cryptocurrency exchange learned its stock will join the widely followed S&P 500 index next week. That means many investment funds will likewise add it before trading begins on Monday. Coinbase will replace Discover Financial Services, which is getting bought by Capital One Financial. Stocks in the artificial-intelligence industry were also strong. Nvidia rose 5.6% and was the biggest single force pushing upward on the S&P 500. It's partnering with Saudi Arabia's sovereign wealth fund-owned AI startup Humain to ship 18,000 chips to the Middle Eastern nation to help power a new data center project. Super Micro Computer, which builds servers used in AI, jumped 16%. GE Vernova, which is hoping to power vast AI data centers, rose 4%. Palantir Technologies gained 8.1%. They helped offset UnitedHealth Group, whose shares tumbled 17.8% after it suspended its full-year financial forecast due to higher-than-expected medical costs. The nation's largest health insurer also announced that CEO Andrew Witty was stepping down for personal reasons and that Chairman Stephen Hemsley will become CEO, effective immediately. UnitedHealth was the main reason the Dow lagged behind other U.S. stock indexes. All told, the S&P 500 rose 42.36 points to 5,886.55. The Dow Jones Industrial Average fell 269.67 to 42,140.43, and the Nasdaq composite climbed 301.74 to 19,010.08. In the bond market, Treasury yields ticked higher with hopes for the U.S. economy. The yield on the 10-year Treasury rose to 4.48% from 4.45% late Monday. The two-year Treasury yield, which moves more closely with expectations for Fed action, ticked up to 4.01% from 3.98%. In stock markets abroad, indexes rose across much of Europe and Asia. Stocks fell 1.9% in Hong Kong but rose 1.4% in Tokyo. Automakers were among the big gainers in Japan. Nissan Motor Co. added 3% ahead of an announcement that it plans to lay off 20,000 of its workers as part of its restructuring efforts. The automaker said Tuesday that it racked up a loss of 670.9 billion yen ($4.5 billion) in the last fiscal year. Choe writes for the Associated Press.
Los Angeles Times
12-05-2025
- Business
- Los Angeles Times
Dow leaps 1,100 points and S&P 500 rallies 3.3% following a 90-day truce in the US-China trade war
NEW YORK — Stocks rallied Monday after China and the United States announced a 90-day truce in their trade war. Each of the world's two largest economies agreed to take down temporarily most of its tariffs against the other, which economists had warned could start a recession and create shortages on U.S. store shelves. The Standard and Poor's 500 index shot up 3.3% to pull back within 5% of its all-time high set in February. It's been roaring higher since falling nearly 20% below the mark last month on hopes that President Trump will lower his tariffs after reaching trade deals with other countries. The index at the heart of many 401(k) accounts is back above where it was on April 2, Trump's 'Liberation Day,' when he announced stiff worldwide tariffs that ignited worries about a potentially self-inflicted recession. The Dow Jones Industrial Average jumped 1,160 points, or 2.8%, and the Nasdaq composite climbed 4.3%. It wasn't just stocks rising following what one analyst called a 'best case scenario' for US-China tariff talks, which reduced tariffs by more than what many investors expected. Crude oil prices climbed because a global economy less burdened by tariffs will likely burn more fuel. The value of the U.S. dollar strengthened against everything from the euro to the Japanese yen to the Swiss franc. And Treasury yields jumped on expectations that the Federal Reserve won't have to cut interest rates as deeply this year as earlier expected in order to protect the economy from the damage of tariffs. Gold's price fell, meanwhile, as investors felt less need to buy something safe. The move announced Monday could add 0.4 percentage points to the U.S. economy's growth this year, according to Jonathan Pingle, U.S. chief economist at UBS. That's a significant chunk, and every bit counts when the U.S. economy shrank at a 0.3% annual rate in the first three months of the year. The United States said in a joint statement that it will cut tariffs on Chinese goods to 30% from as high as 145%. China, meanwhile, said its tariffs on U.S. goods will fall to 10% from 125%. The 90-day pause gives time for more talks following the weekend's negotiations in Geneva, Switzerland, which the U.S. side said yielded ' substantial progress.' The 90-day reprieve also comes at a vital time for the economy, allowing retailers and suppliers to 'ensure that shelves are stocked for the all important back-to-school and holiday shopping seasons,' said Carol Schleif, chief market strategist at BMO Private Wealth. Of course, conditions could change quickly again, as Wall Street has seen all too often in Trump's on-again-off-again rollout of tariffs. Big challenges still remain in the negotiations between China and the United States, and there is 'no reason to believe that this will be anything other than a slow process,' said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. The U.S.-China pause followed a deal the United States announced last week with the United Kingdom that will bring down tariffs on many U.K. imports to 10% but will still require weeks to finalize all the details. Economic reports scheduled for later this week, including on inflation and sentiment among U.S. consumers, could also show how much damage the U.S. economy has already taken because of uncertainty about tariffs. But the mood was nevertheless ebullient across Wall Street on Monday, and gains were widespread. Stocks of smaller companies rallied. Their livelihoods can be more dependent on the strength of the U.S. economy than their bigger and more insulated rivals, and the smaller stocks in the Russell 2000 index jumped 3.4%. Apparel companies were also strong. Lululemon leaped 8.7%, for example. More than a quarter of its fabric came from mainland China last fiscal year, and a reduction in tariffs would mean a less-tough decision on whether to pass along increases to costs to customers or to eat them through reduced profits. Nike rose 7.3%. Travel companies jumped on hopes that lower tariffs would encourage more customers to feel comfortable enough to spend on trips. Carnival rose 9.6%, and Delta Air Lines climbed 5.8%. Many retailers rose because much of what they sell comes from China and elsewhere in Asia. Best Buy jumped 6.6%, and Amazon rallied 8.1%. All told, the S&P 500 rose 184.28 points to 5,844.19. The Dow Jones Industrial Average gained 1,160.72 to 42,410.10, and the Nasdaq composite leaped 779.43 to 18,708.34. In stock markets abroad, indexes rose across most of Europe and Asia, though often by less than the U.S. market. In the bond market, the yield on the 10-year Treasury jumped to 4.47% from 4.37% late Friday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do with interest rates, jumped even more. It rose to 4.00% from 3.88% as traders ratcheted back expectations for how many cuts to interest rates the Fed may deliver this year. Many traders are now betting on just two cuts this year, according to data from CME Group. Choe writes for the Associated Press.
Business Recorder
10-05-2025
- Business
- Business Recorder
Green Sukuk
EDITORIAL: A press release issued on Wednesday maintained that the government is proud to announce a major milestone in the country's sustainable finance journey with the launch of the first Green Sukuk of 20 to 30 billion rupees. Two observations are critical. First, irrespective of the fact that a Sukuk is a pillar of Islamic finance, it is government borrowing and the rate of return will be determined by market conditions. And second, the cited Sukuk amount, from between 20 and 30 billion rupees, indicates that the government is unsure as to how much public interest the offer of this equity will generate. That interest no doubt has been compromised by the ongoing escalatory conflict between India and Pakistan, a fact that is reflected by the Pakistani bonds gyrating. What is relevant to note is that all three international rating agencies have never rated the country at investment grade and while last month one rating agency, Fitch, improved our rating, yet the improvement was from substantial credit risk to highly speculative defined as default risk is present, but a limited margin of safety remains with capacity for continued payments vulnerable to deterioration in the business and economic environment. Additionally, neither of the remaining two ratings agencies — Standard and Poor's and Moody's — has raised Pakistan's rating in line with Fitch's. And subsequent to the Indian attack and the downing of the Indian planes by Pakistan, Moody's has stated that in case of a further escalation between the two nuclear powers, the price of war maybe too high for Pakistan. Needless to add, the limited margin can be defined as remaining on an extremely harsh upfront International Monetary Fund programme with any violation of agreed conditions likely to be followed with the cessation of the programme accompanied by the withdrawal of the 16 billion dollar rollovers by the three friendly countries — China, Saudi Arabia and the United Arab Emirates. It is relevant to note that by far the largest budgeted expenditure has been debt servicing cost, and this cost has been steadily rising due to a rise in reliance on borrowing from external sources as well as domestic sources. In the budget for the current year, mark-up has been projected at 9.775 trillion rupees out of a total outlay of 18.877 trillion rupees. Last fiscal year the budgeted amount for mark-up was 7.302 trillion rupees, which in the revised estimates was 8.26 trillion rupees — an upward revision of 13 percent. Higher than the budgeted amount for mark-up has been the normal practice in this country as the budgeted expenditure rises and therefore there is the likelihood that this year too the mark-up would be higher than the budgeted amount, especially given the cross border conflict. Pakistan's economy remains extremely fragile (indicated by foreign exchange reserves less than the rollovers, remittances shored up by purchase of dollars on the open market by the State Bank of Pakistan — a charge by independent economists that the apex bank has yet to deny, and a large-scale manufacturing sector persistently in the negative realm for the past three years). The situation would worsen exponentially if Modi's threat of abrogating the Indus Waters Treaty becomes effective in the medium to long-term, as that would make Pakistan already defined as a water scarce country a highly water-stressed country experiencing drought or floods on India's whims. In other words, simply by naming it Green Sukuk would not miraculously reverse the negative impact of climate change that Pakistan has been subjected to in recent years. One would therefore hope that the stakeholders take full cognizance of the situation and take appropriate measures to deal with multiple challenges that face the country today. Granted that it is an extremely challenging task, but the onus of meeting it rests with the stakeholders. Copyright Business Recorder, 2025
Business Recorder
03-05-2025
- Business
- Business Recorder
S&P suggests staying the course, accelerating reforms
ISLAMABAD: The Standard and Poor's (S&P) Global Ratings recommended Pakistan to stay the course, deepen the reform momentum, and focus on embedding permanence in macroeconomic stability, with international partners, while expressing readiness to support the country in achieving these objectives. The Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, along with his team, held a Zoom meeting on Friday with representatives of S&P Global Ratings as part of the ongoing Pakistan Sovereign Ratings Review. Aurangzeb briefed S&P on reform progress and economic stability outlook. The finance minister presented a detailed overview of the government's macroeconomic reform agenda and reaffirmed Pakistan's commitment to achieving sustainable and inclusive economic growth by enhancing productivity and promoting exports. He emphasised the continuity of reforms across key sectors including taxation, energy, state-owned enterprises (SOEs), privatisation, public finance management, rightsizing of government functions, and more active debt management strategies. The finance minister noted that inflation and the current account deficit (CAD) had remained a good story throughout the year, contributing positively to overall economic stability. He also highlighted the achievement of surpluses in both the primary balance and the current account as major milestones, underscoring the improving fundamentals of Pakistan's economy. He stated that the country's external portfolio was well-managed, with foreign exchange reserves projected to reach $14 billion by the end of June, supported by upcoming institutional and trade inflows, strong remittances, and easing oil prices, all of which are helping reduce pressure on the external account. He credited strict financial discipline and robust coordination between the federal and provincial governments for enabling the achievement of a primary surplus. The finance minister pointed to significant institutional reforms including the signing of a comprehensive National Fiscal Pact, operationalisation of the National Tax Council, and the imposition of agricultural income tax, reflecting a whole-of-government approach and a shared national resolve to improve resource efficiency, broaden the tax base, and ensure long-term inclusive growth. He stated that the tax-to-GDP ratio was expected to reach 10.6 percent by the end of June, which would mark progress toward the government's target of raising it to 13 percent by the conclusion of the 37-month Extended Fund Facility (EFF) with the International Monetary Fund (IMF). He added that the separation of the Tax Policy office from the Federal Board of Revenue (FBR) was part of a broader effort to align tax policymaking with economic value principles rather than administrative convenience. The finance minister also shared insights from his recent visit to the United States for the World Bank/IMF Spring Meetings, during which he held over 70 meetings in six days with counterparts, Development Finance Institutions (DFIs), investment banks, multilateral and bilateral partners, rating agencies, think tanks, and media outlets. He conveyed that the feedback received from these stakeholders consistently reflected appreciation and support for the structural reforms and macroeconomic stability achieved by Pakistan over the past 14 months. At the same time, there was a strong and unified recommendation for Pakistan to stay the course, deepen the reform momentum, and focus on embedding permanence in macroeconomic stability, with international partners expressing readiness to support the country in achieving these objectives. Copyright Business Recorder, 2025
