US stocks waver, then end the day mixed

CHRISTINA REXRODE

AP Busi­ness Writer

NEW YORK — It was a mun­dane end to an elec­tri­fy­ing week on the stock market.

Stock indexes wavered inde­ci­sively between small gains and losses Fri­day before clos­ing mixed. Ear­lier in the week, the Stan­dard & Poor’s 500 and the Nas­daq com­pos­ite index were on a tear, hit­ting lev­els that hadn’t been reached in years.

On Fri­day, the Dow Jones indus­trial aver­age and the Nas­daq both ended the day down. The Dow fell 20.14 points to 13,232.62. The Nas­daq fell 1.11 points to 3,055.26. The broader S&P 500 index edged up 1.57 points to 1,404.17.

Despite Friday’s losses, the three major indexes were all still up more than 2 per­cent for the week. The Dow had its first down day after seven straight gains, end­ing its longest win­ning streak since Feb­ru­ary 2011.

Investors were weigh­ing com­pet­ing reports about the health of the U.S. econ­omy. A key mea­sure of con­sumer sen­ti­ment came in lower than expected, and high gas prices con­tin­ued to weigh down hopes about a recov­ery. On the plus side, prices for other goods, includ­ing food, stabilized.

Telly Zachari­ades, a part­ner at The Valence Group invest­ment bank, said the mar­ket appears to be on the upswing, even if it’s marred by a few off-days. “It’s almost like today was a spring train­ing game that ended up get­ting rained out,” he said.

Oth­ers think the market’s rise ear­lier this week only masks under­ly­ing prob­lems in the economy’s fun­da­men­tals, like uncer­tainty over oil prices and tax poli­cies and the country’s bur­geon­ing deficit.

“The mar­ket is giv­ing us a free pass on our unsus­tain­able fis­cal posi­tions through the pres­i­den­tial elec­tion,” said Barry Knapp, head of equity strate­gies at Bar­clays Cap­i­tal. “But in 2013, we’re going to have to deal with this.”

“What we’ve seen today,” Knapp added, “is a lit­tle bit of a warn­ing sign.”

The market’s back-and-forth pat­tern this week was caused partly by con­flict­ing news about the econ­omy. The Uni­ver­sity of Michigan’s closely watched con­sumer sen­ti­ment index came in below ana­lysts’ expec­ta­tions, dri­ven by wor­ries about ris­ing gas prices. The Labor Depart­ment also noted that gas prices soared 6 per­cent in February.

Many ana­lysts think the higher gas prices will crimp the U.S. econ­omy by shrink­ing the amount of money that peo­ple have to spend on dis­cre­tionary pur­chases. Gas is cur­rently sell­ing for an aver­age of $3.83 per gal­lon in the U.S., 31 cents more than a month ago.

The price of gas has spiked as Iran’s nuclear pro­gram sows ten­sion in the Mid­dle East. Some ana­lysts also blame the Fed­eral Reserve, which has pumped cheap money into the econ­omy in an attempt to help it recover. That has also put pres­sure on the U.S. dol­lar. When the dol­lar falls in value, it takes more of them to buy the same amount of oil.

The Labor Depart­ment also noted that infla­tion in other sec­tors seemed under con­trol. Food prices, which have been ris­ing, were unchanged for the first time in 19 months.

Pos­i­tive signs from bonds and the Euro­pean mar­kets added to the con­fu­sion about where the mar­ket was going. The yield on the 10-year Trea­sury con­tin­ued to rise, reach­ing 2.30 per­cent late Fri­day com­pared with 2.03 per­cent the week before. That’s the high­est level since Octo­ber and a sign that investors are more con­fi­dent in the econ­omy. Mar­kets in Europe also fin­ished higher.

The ear­lier part of the week was an exhil­a­rat­ing ride for the stock mar­ket. Both the Nas­daq and the S&P 500 crossed key mile­stones. The Nas­daq closed above 3,000 for the first time since Decem­ber 2000; The S&P closed above 1,400 for the first time since June 2008. On Tues­day, the Dow, the Nas­daq and the S&P 500 all recorded their biggest per­cent­age gains of the year.

The eupho­ria was brought on by what investors saw as encour­ag­ing news about employ­ment and retail sales. Some cau­tioned that the improve­ments were incre­men­tal and uncon­vinc­ing, dri­ving short-term mar­ket surges but lit­tle else.

“It’s becom­ing so much of a sound bite econ­omy,” said Ziad Abdel­nour, CEO of pri­vate equity firm Black­hawk Partners.

In the U.S., Bank of Amer­ica led the Dow higher, ris­ing more than 6 per­cent after a report that its pro­por­tion of delin­quent loans fell in Feb­ru­ary. Buf­falo Wild Wings fell more than 3 per­cent after a Wed­bush ana­lyst low­ered his rat­ing to the equiv­a­lent of hold from buy, not­ing the high cost of wings.

Energy com­pa­nies were the biggest gain­ers in the S&P 500 index. Transocean, an off­shore drilling com­pany, rose nearly 5 per­cent after it reported that it had secured sev­eral new con­tracts. Ana­lysts from at least three com­pa­nies raised their price tar­gets on the company.

Posted by AP News on Mar 16 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.