Quarter Comes to a Quiet Close
Wall Street’s boisterous second quarter finished with a whimper Monday as key indexes ended modestly lower, despite portfolio-reshuffling by some managers.
In commodities markets, crude oil prices rose back above $30 a barrel amid weather-related concerns in the Gulf of Mexico and worries about unrest in Nigeria. Oil prices were nearly unchanged in the quarter, belying expectations of a lasting price plunge after the U.S.-Iraq conflict ended.
The Dow Jones industrial average ended down 3.61 points, or less than 0.1%, at 8,985.44, and the broader Standard & Poor’s 500 index slipped 1.72 points, or 0.2%, to 974.50.
The tech-laden Nasdaq composite index edged down 2.46 points, or 0.2%, to 1,622.80.
Advancers narrowly outnumbered decliners by 17 to 16 on the Big Board, while winners and losers were about evenly matched on Nasdaq.
Trading was heavy and volatile, fueled by quarter-end “window dressing” in which fund managers looking to dress up their quarterly statements buy stocks that have risen during the quarter and dump ones that have declined.
The S&P; 500 surged 14.9% in the quarter, its biggest quarterly rally since the last three months of 1998. The Dow gained 12.4% since the end of March, while the Nasdaq composite rose 21% -- their best quarterly performances since the end of 2001.
Investors are betting that the lowest interest rates in 45 years and a $350-billion package of federal tax cuts will spur spending by consumers and businesses in the second half.
Some economic news Monday provided another reason to be hopeful: The National Assn. of Purchasing Management’s Chicago chapter reported its manufacturing-sector barometer rose to 52.5 from 52.2 in May. The index pointed to modest growth, but it fell short of economists’ forecasts for a reading of 53.0.
Monday’s session was choppy in part because of the annual rebalancing of the Russell stock indexes. Fund managers seeking to reflect the benchmark indexes buy stocks that are added and sell those that are dropped. The changes are effective June 30 of each year.
Trading may slow after today as many portfolio managers and traders head for vacation. The U.S. stock markets will close at 10 a.m. PDT Thursday, and will be shut Friday for the Fourth on July holiday.
In commodities trading, oil rose nearly a dollar as a tropical storm bore down on oil facilities in the Gulf of Mexico and a general strike in Nigeria threatened supply from the world’s eighth-biggest exporter.
Crude for August delivery rose 92 cents to $30.19 a barrel in New York trading.
Oil majors operating in Nigeria, including Royal Dutch Shell, Exxon Mobil and ChevronTexaco, said production and exports were not yet affected by the strike.
Even so, traders were wary of a repeat of Nigeria’s preelection violence in March that cut more than 800,000 barrels per day from the country’s normal oil production of more than 2 million barrels a day.
A fresh disruption could bite into already low U.S. oil inventories especially as Iraqi crude has yet to make any substantial return to international markets since exports were halted before the U.S.-led war.
Tight supplies helped lift U.S. crude futures to an average price of $28.90 a barrel in the second quarter, the highest price for the period since 1984, according to Paul Horsnell, an analyst at J.P. Morgan bank. Crude futures ended the first quarter at $31.04 a barrel.
Prices also strengthened Monday as Tropical Storm Bill bore down on energy facilities in the Gulf of Mexico, threatening disruption to a region that holds about a quarter of U.S. oil production capacity. The storm was expected to hit south-central Louisiana late Monday.
In other highlights:
* The 10-year Treasury note yield ended the quarter at 3.51%, down from 3.54% on Friday and from 3.80% on March 31.
* The euro gained against the dollar in the quarter, ending at $1.148, compared with $1.09 on March 31. But the euro has pulled back from a record high of $1.191 on May 29.
* Near-term gold futures in New York finished at $346 an ounce. Gold started the quarter at $335.90.
* Walt Disney rose 41 cents to $19.75, bolstered by bullish comments by an influential analyst published in Barron’s magazine. Rising 2.1%, it was the day’s biggest gainer in the Dow index.
* Intel shares edged up after receiving a boost from Smith Barney, which upgraded its rating to “outperform” from “neutral.” Intel ended up 24 cents at $20.81 and was Nasdaq’s most actively traded issue.
Market Roundup, C8-9
