All three of the major stock indexes on Friday posted their first down week since mid-April, held back by lingering concern that the Federal Reserve might scale back the economic stimulus measures that have also propelled the markets’ rally.
Still, the indexes closed well off their lows in sparse trading Friday ahead of the three-day Memorial Day weekend. The Dow Jones industrial average ended slightly higher, buoyed by a 4 percent gain in Procter Gamble shares; the Standard Poor’s 500-stock index and the Nasdaq composite index both finished a shade lower.
On Friday, the Dow gained 8.60 points, or 0.06 percent, to 15,303.10. The S. P. 500 edged down only 0.91 of a point, or 0.06 percent, to close at 1,649.60. The Nasdaq dipped 0.27 of a point, or 0.01 percent, to 3,459.14. For the week, the S. P. and the Nasdaq were down 1.1 percent, and the Dow was off 0.3 percent.
A 3.3 percent jump in April orders for long-lasting manufactured goods, like refrigerators and toasters, showed that the economy might be stronger than some had thought.
“A day like today is clear evidence that there is still money on the sideline to get into equities,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, N.Y. Investors, he said, are “looking for almost any excuse to get in.” Over all, the market’s declines have been short and shallow since November.
“Investors are taking advantage of down days to put more cash to work,” Mr. Ghriskey said, “especially when the decline is not based on something fundamental.”
Trading has been choppy since Wednesday as investors here and abroad grappled with the Fed’s evolving stance on stimulus. The markets have been focused on the possibility that the $85 billion a month in bond purchases made by the Fed will be scaled back later this year, after recent Congressional testimony by the Fed chairman, Ben S. Bernanke, and minutes from the Federal Open Market Committee’s latest meeting.
The minutes showed some disagreement among the policy-setting committee’s members “in terms of the approach moving forward, specifically the time frame” of the unwinding of the Fed’s stimulus efforts, said Peter Kenny, chief market strategist at Knight Capital in Jersey City, N.J.
The measures have been instrumental in a rally that has driven stocks to record highs, not counting inflation. Even as there is some fear that the Fed will exit too soon, many analysts say the eventual reduction of the bond-buying will come with an expansion of the economy and corporate earnings, which would continue to support equities.
Joe Bell, a senior equity analyst at Schaeffer’s Investment Research in Cincinnati, said many people had credited the Fed for the recent rally without considering improvement in the job market or the housing sector. “The economy in general has been on a lot better footing than perhaps people have given it credit for,” he said.
The benchmark 10-year Treasury note barely moved on Friday, adding 1/32 to trade at 97 21/32, as its yield slipped to 2.01 percent, from 2.02 percent late Thursday evening.
Procter Gamble shares rose 4 percent, to close at $81.88, after the company, the world’s largest maker of household products, brought back A.G. Lafley as its chief executive on Thursday in the midst of a major revamping.
Tesla Motors rose to a 52-week high on Friday as bets against the stock decreased, suggesting another bout of short-covering in the electric carmaker’s shares. Tesla stock jumped 4.7 percent, to $97.08, after rising as high as $97.95.
Abercrombie Fitch was among the S. P. 500’s biggest losers after the retailer cut its profit forecast and said quarterly comparable sales fell 15 percent. Its stock lost 8 percent, to close at $50.02.
Shares of Sears Holdings plummeted 13.6 percent, to $50.25, after the retailer reported a bigger-than-expected quarterly loss on Thursday.
Article source: http://www.nytimes.com/2013/05/25/business/daily-stock-market-activity.html?partner=rss&emc=rss
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