Stock Rally Takes a Spring Break
Wall Street took a break Tuesday from a week of frenetic buying, leaving major indexes mixed as investors stuck with blue chips but sold many technology shares on an earnings warning from Nokia.
Bond prices rallied, putting a dent in two days of heavy losses, after two Federal Reserve officials appeared to damp worries that the central bank might tighten credit soon.
With trading volume modest, some bigger stocks drifted into positive territory late in the session. The Dow Jones industrial average closed up 12.44 points, or 0.1%, at 10,570.81.
Analysts said the action was relatively subdued because many players are away this week. Markets will be closed on Good Friday.
“It’s a vacation-type week, and I’d expect this is just a meandering thing,” said Jay Suskind, trader at Ryan Beck & Co.
Broader stock indicators moved lower. The Standard & Poor’s 500 index was down 2.41 points, or 0.2%, at 1,148.16, and the tech-heavy Nasdaq composite fell 19.22 points, or 0.9%, to 2,059.90.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange and by 2 to 1 on Nasdaq.
The Dow has posted impressive gains in six of the last seven sessions, including a 97-point rise Friday after the Labor Department reported an unexpectedly large jump in new jobs last month. That boosted hopes that the economy’s recovery would be sustained.
Since its March 25 close, the Dow is up 357.84 points, or 3.5%.
Analysts said it was only a matter of time before profit takers would cash in on higher prices, however, and that weighed on the market for much of Tuesday.
Nasdaq’s losses were blamed in part on Nokia, which warned that its first-quarter earnings would come in at the lower end of the expected range. Nokia, which plummeted $3.94, or 19%, to $17.21, said it had underestimated the public’s demand for less expensive cellphones.
In general, however, earnings expectations are high for the first quarter because many companies have raised their guidance in recent weeks, reflecting the stronger economy.
Peter Dunay, chief market strategist at brokerage Wall Street Access, said the market’s fundamentals remained sound, and that major worries of the last month -- a weakened dollar, rising oil prices and a lack of job growth -- had lessened over the last week. But the market remains susceptible to bad news from overseas, he said.
“The only real concern I have is Iraq. The tensions seem to be getting worse and worse,” Dunay said. “The question starts to become, ‘How bad will that situation be?’ I think this could fuel more terrorism events around the world should the situation persist, and that could hit us pretty hard.”
In the bond market the yield on the benchmark 10-year Treasury note declined for the first time in four sessions. The yield dipped to 4.15% from 4.21% on Monday.
St. Louis Federal Reserve President William Poole, in a speech, said it would take “some string of months” of employment numbers before the Fed could judge whether the economic recovery was on a solid path.
San Francisco Fed advisor Simon Kwan echoed sentiments that more data were needed to confirm that a recovery was fully underway. “I think we would like to see more confirmation that the job market has finally picked up to a more sustainable pace,” Kwan said.
The dollar fell against the euro and the yen, while prices of oil and gold rose.
Among the day’s highlights:
* Earnings season began with two reports before the start of the session. UTi Worldwide, a shipping logistics company, was up 93 cents at $45.03 after the company beat Wall Street estimates by 3 cents a share. Racing company International Speedway posted record results in line with expectations but lost 99 cents to $48.27.
* Black & Decker upped its quarterly earnings outlook by 20 cents a share, based on strong demand. The tool manufacturer, which will announce earnings April 20, rose $1.38 to $59.38.
* Kellogg, the cereal maker, gained 84 cents to $40.34 after it said quarterly earnings per share would be 30% higher than a year ago.
* Tech stocks falling with Nokia included Motorola, down 38 cents to $18.25; RF Micro Devices, down 63 cents to $8.27; and Texas Instruments, off $1.78 to $29.16.
* Yahoo dropped $1.22 to $48.77 after Schwab Soundview downgraded the Internet company to “neutral” from “buy.” Yahoo is scheduled to announce its first-quarter earnings after today’s session.
* Shares of home builders steadied after sliding Friday and Monday on worries about higher mortgage rates. KB Home rose $1.09 to $76.36, Toll Bros. added 46 cents to $43.45, Standard Pacific was up 33 cents to $57.69 and Pulte rose 91 cents to $52.39.
Market Roundup, C7
