Small stocks lead week’s gains
Wall Street closed mostly higher Friday, capping a strong week as investors grew more optimistic that the economy would continue to expand without stoking inflation.
Smaller-company stocks led the week’s rally, retaking the lead in the market from blue chips.
The Dow Jones transportation stock index, considered a bellwether of economic activity, rose to a record high Friday -- even as oil prices jumped above $59 a barrel.
Shares drifted for much of the session after the government reported a smaller-than-expected net gain of 111,000 jobs last month but revised upward the number of jobs added in the fourth quarter.
Combined, the data pointed to an economy in good shape, many analysts said.
That was reinforced by the Federal Reserve on Wednesday, when the central bank held its key short-term interest rate at 5.25% and said it expected the economy to grow “at a moderate pace over coming quarters.”
The market rallied briskly Wednesday after the Fed’s decision and continued to climb Thursday, pushing the Dow Jones industrial average to a record high.
On Friday, profit-taking clipped the Dow, which eased 20.19 points, or 0.2%, to 12,653.49.
But most broader indexes advanced. The Standard & Poor’s 500 added 2.45 points, or 0.2%, to 1,448.39, a fresh six-year high.
The Nasdaq composite gained 7.5 points, or 0.3%, to 2,475.88.
Winners edged losers on the New York Stock Exchange and Nasdaq.
In another report Friday, the final Reuters/University of Michigan U.S. consumer sentiment reading for January rose to a two-year high.
“We’ve had a string of fabulous numbers for the economy and the market’s had a great week,” said Brian Stine, a money manager at Allegiant Asset Management in Cleveland. “The Fed looks like they’ll be right and we’ll have moderate growth and declining inflation, so they won’t be forced to tighten and won’t need to ease.”
For the week, the Dow rose 1.3%, the S&P; 500 jumped 1.8% and the Nasdaq advanced 1.7%.
But the week’s biggest gainers were smaller stocks. The Russell 2,000 index of small-company shares added 0.2% to a record 809.42 on Friday, and surged 2.7% for the week.
An S&P; index of mid-size stocks also closed at a record high Friday, up 0.3% for the day and 2.9% for the week.
Optimism about the economy may be boosting smaller stocks as investors seek companies that would benefit from a prolonged expansion, said John Bollinger, head of Bollinger Capital Management.
Year to date, the Russell 2,000 index is up 2.8%, better than the 2.1% gain of the S&P; 500 and the 1.5% gain of the Dow industrials.
Until this week, blue chips had been leading the market in the new year.
Among Friday’s highlights:
* The Dow transports index climbed 0.2% to 5,006.89, its first close above 5,000. The index jumped 6.2% for the week, fueled by railroad shares.
When the Dow transports and Dow industrials are hitting record highs at the same time, that has historically been considered a healthy signal for the market overall.
* Transportation issues advanced even though crude oil continued to march higher. Near-term oil futures in New York rose $1.72 to $59.02 a barrel, a five-week high. The price was up $3.60, or 6.5%, for the week.
Oil has climbed as the Organization of the Petroleum Exporting Countries has cut production and colder weather in the Northeast has boosted demand.
* Bonds were little changed, with the yield on the benchmark 10-year Treasury note falling to 4.82% from 4.84% on Thursday.
* Gold futures fell $11.20 to $646.20 an ounce amid a broad pullback in metal prices.
* Internet retailer Amazon.com fell $1.31 to $37.39 after the company’s fourth-quarter profit fell 51%.
* Intuitive Surgical rocketed $17.45, or 18%, to $116.77 after profit at the company, which makes robotic surgical gear, came in better than expected.
