Stocks End Day Mixed, but Month Is Strong
Stocks stalled Friday as investors digested two weak economic readings, including a report that the U.S. economy notched its worst performance in a decade during the third quarter. Still, the session capped the market’s best monthly performance since April.
The blue-chip Dow Jones industrial average closed up 22.14 points, or 0.2%, at 9,851.56. But the broader market ended the day slightly lower. The Nasdaq composite index declined 2.68 points, or 0.1%, to 1,930.58, and the Standard & Poor’s 500 index slipped less than a point to 1,139.45. Advancers and decliners were even on the New York Stock Exchange, but losers held a slight edge on Nasdaq. Trading volume was moderate.
Stocks fell broadly early in the day, in part because the Commerce Department said the U.S. economy contracted at an annual rate of 1.1% in the third quarter, steeper than the preliminary estimate of a 0.4% decline reported last month and larger than the 0.9% decrease analysts expected.
Investors also was unsettled initially by a drop in a measure of business activity in the Chicago region. The Chicago purchasing management index fell to 41.1 in November from 46.2 in October.
“We’re able to shrug it off. I think the trend of economic data have been positive, and so individual pieces aren’t toppling over the apple cart,” said Arthur Hogan, chief market analyst for Jefferies & Co. “The momentum seems to be to buy stocks.”
November marked the strongest month for the market since April as stocks continued to rally off the three-year lows hit Sept. 21. For the month, the S&P; 500 jumped 7.5%, while the Nasdaq surged 14.2% and the Dow rose 8.6%. The Dow has climbed 19.6% since Sept. 21.
Stocks were mixed for the week, however, as the rally lost steam in the face of concern that stocks have risen too far too fast. For the week, the S&P; 500 shed 1%, the Nasdaq rose 1.4%, and the Dow lost 1.1%.
Given how strongly the market has rallied since late September, analysts said there is plenty of room for investors to take profits . Analysts also said the market will have a tough time climbing above current levels, at least until there are signs business is improving.
“The market has been rip-roaring ahead. It may be a while before we resume the up trend on a definitive basis,” said Ronald J. Hill, investment strategist at Brown Bros. Harriman & Co.
The yield on the benchmark 10-year Treasury note closed at 4.75%, unchanged from Thursday but down a quarter point from a week ago. The yield on the two-year T-note slipped to 2.83% from 2.87% on Thursday.
In other market news Friday:
* Home Depot was the strongest Dow member, climbing $2.63 to $46.65 after it affirmed fourth-quarter and yearly earnings estimates and gave an upbeat forecast.
* General Motors, which said that it expects the economy to recover late next year and that 2002 vehicle sales will be 15 million to 15.5 million, advanced $1.11 to $49.70. GM is a Dow component.
* Tech stocks were mixed. Among widely held names, Microsoft fell 63 cents to $64.21, Dell Computer rose 87 cents to $27.93, and Cisco Sysems gained 55 cents to $20.44.
* Novellus Systems fell $3.53 to $38.07 after warning that fourth-quarter orders will be fewer than forecast and that it may report losses in the first and second quarters next year. That helped push the Philadelphia Stock Exchange semiconductor index down 2.7%. Applied Materials, the leading semiconductor equipment maker, lost $1.71 to $39.74.
* The Standard & Poor’s utility index tumbled 5.1% as investors worried about fallout from the collapse of Enron. Dynegy, Enron’s erstwhile merger partner, fell $3.30 to $30.35, Calpine dropped 82 cents to $21.56, and Peoples Energy shed $1.14 to $38.42. Enron, an $80 stock 10 months ago, slipped 10 cents to 26 cents.
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Market Roundup: C4-5
