Minimal losses end rough week on Wall Street
A late-session sell-off kept stocks narrowly mixed in the United States today as cautious investors took what little profits they could from a disappointing week marked by an interest rate rise and inflation concerns.
All three major indexes saw their third straight week of losses.
Economic data pointing to modest growth gave investors enough courage to find bargains after the week’s sell-off.
With orders for durable goods – those made to last more than three years - rising by just 0.3% in February, investors felt that demand was sluggish enough to forestall rising prices.
But the last hour of trading ahead of the Good Friday holiday saw a pull-back in an already weak relief rally, prompted in part by rising crude oil prices.
Analysts said many investors remain sceptical that the Federal Reserve’s interest rate rises will stem inflation without damaging the economy.
“The market was in a severely oversold condition because of all these inflation fears,” said Peter Cardillo, chief strategist and senior vice president at SW Bach & Co.
“But I still think there’s a bumpy road ahead for a while. The market really needs assurances that the Fed will be able to keep ahead of inflation.”
The Dow Jones industrial average fell 13.15, or 0.13%, to 10,442.87.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.11, or 0.09%, at 1,171.42, while the Nasdaq composite index climbed 0.84, or 0.04%, to 1,991.06 as investors returned to the heavily oversold technology sector.
The stock market tumbled to its third straight week of losses after the Federal Reserve on Tuesday confirmed that inflationary pressures were building within the economy.
Many on Wall Street now believe that higher interest rate hikes, beyond the customary quarter-percentage point increases since the summer, could be coming as early as May.
For the week, the Dow lost 1.76%, the S&P 500 fell 0.83% and the Nasdaq slid 1.53%. The markets are closed Friday for the Good Friday holiday.
After oil prices dropped 4% earlier in the week, crude oil staged a recovery Thursday. A barrel of light crude settled at $54.84, up $1.03, on the New York Mercantile Exchange. Bonds were narrowly higher, with the yield on the 10-year Treasury note falling to 4.59%, down from 4.6% on Wednesday.
The dollar rose against world currencies, while gold prices edged lower.
With inflation fears confirmed by the Federal Reserve earlier in the week, Wall Street will be looking out for modest economic data to show that the economy will grow at a slow enough pace to forestall inflation, but at a fast enough pace to bolster corporate earnings reports.
First quarter earnings reports will begin coming in during the second week of April.
“If you look at the data, the economy is doing just fine, and we expect that to continue,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. “But you see a market that’s been sold off dramatically.
"The key is interest rates, in that hopefully they will strengthen the dollar without causing too much harm to all the debt that companies and consumers have out there.”
General Electric Co gained 23 cents to $35.73 after it increased its profit forecasts for the first-quarter and the full year.
The Dow industrial also said it has priced the secondary offering of 80.5 million shares of Genworth class A common stock at $26.50 per share. GE will own 52% of the outstanding shares after the offering.
Internet services company Yahoo! Inc added 54 cents to $31.41 after its board approved a three billion stock repurchase programme. The buybacks will be spread out over the next five years.
A jury awarded Lexar Media Inc, maker of computer memory and components, $380m (€293.9m) in damages after finding that Toshiba Corp and a US subsidiary stole trade secrets from the company.
Shares of Lexar, which was due to report earnings after the session, more than doubled, rising $3.15 to $6.32.
Advancing issues outnumbered decliners by nearly nine to five on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies was up 3.20, or 0.52%, at 615.26.
