Dow finishes month up 3.4%
Stocks wrapped up their best month in almost a year Tuesday, ending the session little changed as some disappointing economic data curbed investors’ appetite for equities.
Treasury bond yields sank as economic news rekindled hope that the Federal Reserve might cut short-term interest rates.
The Dow Jones industrial average eased 5.77 points, or less than 0.1%, to 12,080.73.
Winners had a slight edge over losers on the New York Stock Exchange.
It was a quiet finish to a big month for the market: The Dow jumped 3.4% in October and hit record highs, amid continued optimism that the economy would coast to a “soft landing” of modest economic growth and reduced inflation risks.
The Dow’s gain was its biggest for any month since last November, when it jumped 3.5%.
The broader market also was up sharply in October. The Standard & Poor’s 500 index, which added 0.1 of a point to 1,377.94 on Tuesday, rose 3.2% last month.
The technology-heavy Nasdaq composite index jumped 4.8% for the month, including a gain of 2.94 points, or 0.1%, to 2,366.71 on Tuesday.
But optimism about the economy was tempered Tuesday by two reports. The Conference Board said its index of consumer confidence fell to 105.4 last month from 105.9 in September. Analysts had expected a reading of 107.8.
Also, manufacturing activity in the Midwest expanded in October but much more slowly than expected and at its weakest pace since last August, the National Assn. of Purchasing Management-Chicago said.
The association’s activity barometer fell to 53.5 from 62.1 in September. Economists had forecast the index at 58. Any reading above 50 indicates expansion.
“After months of nothing but fabulous economic news and earnings, the stock market is suddenly getting buffeted with news that isn’t so great,” said Steve Todd, editor of the Todd Market Forecast in Crestline, Calif.
The market slid Friday after the government said the economy expanded at a 1.6% annualized rate in the third quarter, after inflation. The rate was below expectations.
Some strong third-quarter earnings reports helped buoy the market in mid-October, but recent results have been mixed.
U.S. Steel on Tuesday reported sharply higher quarterly earnings but warned of slower growth in the current quarter. Its shares sank $1.41 to $67.60.
Procter & Gamble slipped 42 cents to $63.39 after its quarterly sales came in weaker than expected, although earnings were up 33%.
Some analysts said the market simply was due for a breather after the powerful rally that began in mid-August. The Dow index is up 12.7% this year.
“We’ve had a pretty big run, so I wouldn’t be surprised for a pause,” said Wayne Reisner, who oversees about $1.6 billion as president of Carret Asset Management in New York.
Stocks also were up sharply around the globe last month. The Brazilian market surged 7.7%, Canadian shares gained 5% and the Australian market jumped 4.7%.
Falling oil prices helped boost stocks in August, September and October, but oil has stabilized in recent weeks. Near-term crude futures fell $2.39 to $58.36 a barrel on Monday in New York and rebounded 37 cents to $58.73 on Tuesday. The recent low was $56.82 set on Oct. 20.
The Treasury bond market shifted back Tuesday to believing that the economy would weaken further, which could spur the Fed to begin cutting interest rates. The yield on the 10-year T-note slid to a three-week low of 4.6% from 4.67% on Monday.
Among the day’s market highlights:
* Stocks falling on earnings disappointment included Cummins, down $5.41 to $126.98; Oshkosh Truck, down $4.65 to $45.21; and healthcare consultant Omnicare, down $4.62 to $37.88.
On the plus side, Eastman Kodak gained 65 cents to $24.40 after posting a narrower-than-expected quarterly loss. Martha Stewart Living Omnimedia jumped $1.02 to $21.20, also after posting a loss that was smaller than expected.
* In the tech sector, Dell jumped 96 cents to $24.33 after brokerage UBS raised its investment rating on the company’s stock to “neutral” from “reduce.”
IBM was up 83 cents to $92.33, a 52-week high, after the company said its board approved $4 billion in additional funds to repurchase stock.
* Gold mining shares continued their recent rebound even though gold futures eased 60 cents to $604.10 an ounce in New York. Barrick Gold gained 76 cents to $31, Goldcorp rose 88 cents to $26.28 and Newmont Mining was up 77 cents to $45.27.
