Indexes rise modestly as investors await cues
Wall Street closed an erratic session with a modest advance Friday as investors awaited further signs about the health of the economy. Falling oil prices and a contract win for Boeing offered some support to the broad market, and the major indexes ended with solid gains for the week.
Energy and basic-materials stocks were weaker Friday, while financial and utility shares mostly moved higher, helped by lower bond yields.
The muted trading followed a sell-off Thursday after Democrats wrested control of Congress from Republicans and touched off concern about the healthcare and defense sectors.
“Oil prices have fallen off a bit and that’s a positive, but there just doesn’t seem to be anything to give the markets a boost,” said Ed Peters, chief investment officer at PanAgora Asset Management. “I think the market is just taking a rest here.”
The Dow Jones industrial average rose 5.13 points, or 0.04%, to 12,108.43.
Among broader indexes, the Standard & Poor’s 500 was up 2.57 points, or 0.2%, at 1,380.90, and the Nasdaq composite gained 13.71 points, or 0.6%, to 2,389.72 -- a five-year high.
Bond yields fell as some investors bet the economy would continue to slow. Fixed-income strategists suspected there was buying from pension funds and other long-term investors. The yield on the 10-year Treasury note sank to 4.59% from 4.61% on Thursday and 4.72% a week ago.
For the week, the Dow rose 1% while the S&P; added 1.2% and Nasdaq jumped 2.5%, advances achieved largely on the market’s upbeat feeling about the election in the first half of the week. That sentiment gave way to uncertainty Thursday about whether Democrats would be sympathetic to business issues.
Crude oil futures dropped $1.57 to $59.59 a barrel in New York trading after the International Energy Agency lowered its forecast for worldwide demand.
Peters of PanAgora contends that Wall Street will need favorable economic news to move the markets now that most companies have reported third-quarter earnings. He cited such news as minutes from the Federal Reserve’s most recent meeting, which are set for release next week.
“I think there is still a concern that interest rates will be rising, that the Fed will tighten further,” he said. Investors want the economy to show adequate signs that it is slowing, which would boost the chances that the central bank will lower short-term interest rates in 2007.
Chris Hensen, portfolio manager for U.S. equities at MFC Global Investment Management, said that though the markets were largely flat Friday, stocks weren’t necessarily done moving higher. Winners topped losers by nearly 2 to 1 on the New York Stock Exchange, a sign of broad investor interest.
Generally, the final months of the year are good for stocks as big investors engage in a bit of “window dressing” to boost their portfolios. Hensen said he didn’t think the unusually strong October, when major indexes all rose at least 3%, would preclude a further climb through year’s end.
He said investors were looking to earnings next week from retailers as well as economic data such as the October consumer price index.
In other market highlights:
* Boeing won out over Lockheed Martin and United Technologies’ Sikorsky division in securing a contract Thursday potentially worth $10 billion to build combat search-and-rescue helicopters for the Air Force. Boeing was up 51 cents at $85.62. Lockheed rose 38 cents to $85.75 and United Technologies was up 15 cents at $65.06.
* Insurance company American International Group rose $1.59 to $69.63 after its third-quarter profit more than doubled because of higher sales and a quiet hurricane season.
* Tanox, a drug developer, jumped $6.11, or 45%, to $19.75 after it agreed to be acquired by Genentech for $919 million. Genentech rose 24 cents to $81.59.
* Hormel Foods rose $1.27 to $36.10 after the meat processor raised its forecasts for the fourth quarter as well as 2006 and 2007 amid strength in its specialty-foods division.
Reuters was used in compiling this report.
