March 25, 2023

Stocks & Bonds: Shares Hesitate After Growth Disappoints

The stock market closed mixed Friday, after the government reported that economic growth was slower at the end of last year than economists expected.

The Dow Jones industrial average had its first losing week of 2012, and spent all of Friday in the red. It ended down 74.17 points, or 0.58 percent, at 12,660.46. The loss snapped a three-week winning streak for the Dow, which fell 60 points for the week, but is still up 3.63 percent for the year.

The Standard Poor’s 500-stock index declined 2.10 points, or 0.16 percent, to 1,316.33 and finished the week up just slightly — 0.95 point. It is up 4.67 percent for the year.

The Nasdaq composite index rose 11.27 points, or 0.4 percent, to 2,816.55. It rose 29.85 points this week and is up 8.11 percent for the year.

The Treasury’s 10-year note rose 14/32, to 100 31/32. The yield fell to 1.89 percent, from 1.94 percent late Thursday.

Economic growth for October through December came in at an annual rate of 2.8 percent. That was the fastest of 2011, but lower than the 3 percent that economists were expecting.

Utility companies led the way down with a fall of 1.3 percent. Most of the other nine industries in the S. P. also declined, but only slightly, continuing a curious trading pattern this year: Trading has been calm in the last four weeks, a big change from the violent moves up and down during much of 2011.

Friday was the 17th day in a row of moves of less than 100 points up or down for the Dow. The last time the index had a longer period of such small moves was a 34-day stretch that started Dec. 3, 2010.

Despite the drift lower, investors displayed some bullishness.

The Russell 2000 index of smaller stocks rose 1.8 percent for the week. Investors tend to sell stocks in the Russell when they are worried, because smaller companies often do not have much cash and other resources when times get tough.

“Risk-taking is picking up,” says Jeffrey A. Schwarte, a portfolio manager at Principal Global Equities. He says his firm has been buying small companies since late last year. “We’re still finding attractive stocks.”

Earlier in the week investors had plenty of reason to hope the indexes would keep moving higher. On Wednesday, the Federal Reserve announced it would most likely keep benchmark interest rates near zero through late 2014, more than a year longer than it previously indicated. That helped send the Dow to its highest close since May.

Also lifting spirits: Apple had its best quarter for profits, trouncing expectations.

On Thursday, the Dow kept rising, briefly passing its highest close since the financial crisis three years ago. But the rally faded after news that new-home sales in December had dropped.

Chevron fell 2.47 percent, or $2.63, to $103.96, the most of the 30 stocks in the Dow average, after its quarterly profit and revenue came in well below what analysts were expecting. Oil and natural gas production declined.

Ford fell 4.16 percent, or 53 cents, to $12.21, after reporting disappointing earnings because of weak sales in Europe. The company said its results were also hurt by problems at parts suppliers in Thailand because of flooding there.

Procter Gamble, which makes Tide, Crest and other consumer products, fell 0.77 percent, or 50 cents, to $64.30, after cutting its earnings outlook.

The investment management company Legg Mason lost 4.76 percent, to $26.02, after its earnings fell by half because clients withdrew money. Legg Mason posted earnings of 20 cents a share. Analysts had expected 25 cents, according to FactSet.

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