Major Indexes Pull Back as Investors Pocket Recent Gains
The Dow industrials snapped a six-session winning streak Tuesday as investors shrugged off a report of a modest rise in car and truck sales in November and pocketed profits from Monday’s big gains.
The major stock indexes Monday reached highs not seen since the first half of 2002, pushed up by reports showing that factory production grew last month at the fastest rate in 20 years.
“To only drift a little bit lower and to hold on to the bulk of the gains is impressive,” said Brian Pears, head of equity trading at Victory Capital Management.
The blue-chip Dow Jones industrial average fell 45.41 points, or 0.5%, to close at 9,853.64. The broader Standard & Poor’s 500 index closed down 3.5 points, or 0.3%, at 1,066.62, and the technology-focused Nasdaq composite index closed down 9.75 points, or 0.5%, at 1,980.07.
Gold futures closed above $400 for the second session in a row Tuesday, the highest in almost eight years, as some investors fretted over the low value of the dollar and looked for safe investments. In New York trading, gold rose $1 to $403.70 an ounce.
Automakers said new U.S. car and truck sales increased in November from a weak October, thanks to the strengthening U.S. economy and the annual year-end cash rebates and other incentives, but it wasn’t enough to excite investors.
Ford Motor said its November light-vehicle sales rose 0.5%, excluding its overseas brands, but it also trimmed its fourth-quarter production forecast. Production cuts can hit earnings directly, but Ford has maintained its fourth-quarter forecast. Ford shares ended down 20 cents at $12.92.
In other trading, the euro rose to a new high of $1.208 against the dollar on concern that a strengthening U.S. economy might swell the country’s trade deficit and boost the amount of dollars flowing into foreign hands. The buck also fell against the Japanese yen.
Traders sold the greenback as reports in the last week have shown U.S. manufacturing surging and orders for durable goods rising. Imports grow as the economy accelerates, boosting the nation’s trade deficit, the broadest gauge of which is the current account.
“It’s unreservedly a positive U.S. growth story,” said Michael Woolfolk, senior currency strategist at Bank of New York. “What’s bedeviling the U.S. dollar now is the perception that the current-account deficit is not being adequately financed by inflows of foreign investment into U.S. securities.”
In energy trading, natural gas capped its biggest two-day rally in nine months on forecasts of colder-than-normal weather during the next two weeks that will boost heating demand in Eastern states. Gas futures have jumped 13% this week, the largest two-day rally since prices soared to an all-time high in late February.
Gas for January delivery rose 29.6 cents Tuesday to $5.579 per million British thermal units on the New York Mercantile Exchange, the highest close since Oct. 10.
Crude oil gained on speculation that the Organization of the Petroleum Exporting Countries might reduce production targets when oil ministers meet Thursday. Crude for January delivery rose 83 cents to $30.78 a barrel on Nymex.
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In other highlights:
* Wal-Mart Stores was the Dow’s biggest loser as Wall Street took a pessimistic view on retailers’ sales after Thanksgiving. Wal-Mart ended down $1.48 at $53.02.
* Hewlett-Packard led the Dow in gains after the computer and printer company said it had a strong Thanksgiving weekend for sales of digital cameras, printers and other items. Its shares rose 61 cents, or 2.8%, to $22.45.
* Some of this year’s best-performing stocks declined. Intel, which has more than doubled this year for the biggest advance in the Dow, dropped 19 cents to $33.85, even after Merrill Lynch & Co. raised profit and sales forecasts for the company. Caterpillar, the Dow’s second-best performer with a 65% advance, lost $1.21 to $75.58.
* Copper futures in New York rose to a six-year high on speculation that Chile’s Codelco, the world’s biggest producer of the metal, won’t reach agreement with unions to avert a mine strike. Copper for March delivery rose 1.3 cents to 97.4 cents a pound in New York trading. Prices went as high as 97.7 cents a pound, the highest for a most-active contract since September 1997. Copper futures, which jumped 5.1% Monday, have climbed 39% this year.
