Stocks slip as investors await signs on economy
After trying for two weeks, the Dow Jones industrial average on Friday finally made it into the black for the year.
But the move had an air of desperation to it.
In an otherwise sleepy session, the Dow closed up 28.34 points, or 0.32%, to 8,799.26. That left it 0.26% above its year-end close of 8,776.39.
Most broader market indexes already had moved well into positive territory for the year during the powerful rally of the last three months. The 30-stock Dow has been lagging far behind.
The blue-chip gauge didn’t join the club with much enthusiasm. After trading little changed for most of the day, it popped higher near the end of the session, with the rest of the market, on a news report that the reformist candidate in Iran’s presidential election had won.
When that report proved premature, the market slipped back, until a modest burst of buying pushed it higher again in the final 12 minutes.
But declining stocks outnumbered advancing issues, and the Nasdaq composite index fell 0.2%.
Joe Saluzzi, a principal at Themis Trading in Chatham, N.J., said a number of recent late-in-the-day market reversals smacked of computer-driven trading games. “It’s the machines,” he said.
Geoffrey Rogow at the Wall Street Journal attributes the late trading shifts to moves by popular exchange-traded funds to realign their indexed portfolios based on investor inflows.
In any case, these mini-displays of fireworks (more like cheap sparklers, really) haven’t meant much to the market’s net performance in the last two weeks: The spring rally has flat-lined since June 1.
The Standard & Poor’s 500 index, which edged up 0.1% on Friday to a fresh 2009 high of 946.21, is up less than 0.4% since the month began.
What’s more, trading volume declined markedly this week. With the S&P; 500 up nearly 40% since March 9, “it just seems like the buyers have run out of gas,” Saluzzi said.
Treasury securities may be siphoning away some equity dollars. After yields reached eight-month highs at midweek, some investors flocked back to government bonds. The 10-year T-note yield slid to 3.78% on Friday, down from 3.86% on Thursday and 3.99% at an auction of new notes Wednesday.
And rising oil prices are worrying, to say the least. Crude futures slipped 74 cents to $72.04 a barrel in New York trading but were up 5.3% for the week, translating into more pain at the pump for strapped consumers.
Still, some stock bulls are betting on the calendar: They’re figuring that many fund managers who have been disbelieving of the spring surge will be pressured to get aboard in the final two weeks of this quarter, so that June 30 statements to the funds’ investors will show a decent commitment to the market.
“Over the very short term it’s hard to see any real let-up [in stocks] because of the need to show that you were involved” in the rally, said Nicholas Colas, market strategist at brokerage BNY ConvergEx in New York.
He notes, too, that it’s hard to find a raving bull on Wall Street, while cautious views “are a dime a dozen.” That suggests that many market pros are figuring a significant pullback is imminent.
The problem with that bearish view, however, is that the market usually isn’t inclined to accommodate the conventional wisdom.
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