Investors turned to profit-taking today, leaving stocks mixed after nearly two weeks of solid gains. Another drop in oil prices limited the market’s losses.
With the major indexes up between 6% and 7% since October 25, analysts said some selling was expected, though earnings and economic fundamentals remain sound.
Some investors were hedging against an anticipated hike in benchmark interest rates following Wednesday’s Federal Reserve meeting.
“We had such a beautiful confluence of event last week, with a smooth election, with Bush winning a second term, and with Friday’s outstanding jobs report,” said Joseph Keating, chief investment officer at AmSouth Asset Management.
“Now we’re seeing a very healthy pause as investors sart to plan for the long term, as opposed to last week’s knee-jerk reactions.”
The Dow Jones industrial average gained 3.77, or 0.04%, to 10,391.31. It was the fourth straight gain for the Dow, and the ninth in the last ten sessions.
Broader stock indicators were mixed. The Standard & Poor’s 500 index was down 1.28, or 0.11%, at 1,164.89, and the Nasdaq composite index inched up 0.31, or 0.02%, to 2,039.25.
Crude futures tumbled as investors, reassured by last week’s oil inventory figures, grew more confident that the United States would have enough heating oil for the winter. A barrel of light crude was quoted at 49.09 dollars, down 52 cents, on the New York Mercantile Exchange.
“I think this is a good day, even if the market isn’t up,” said Hugh Johnson, chief investment officer at First Albany. “So long as oil remains stable at or near these current levels, the market’s likely to manage any round of market taking the way it has so well today.”
Trading was expected to moderate after last week’s heavy volume, as investors prepared for Wednesday’s Fed meeting. A quarter percentage point hike in the benchmark interest rate, to 2%, is considered a given by Wall Street. Investors were expected to again look closely at the Fed’s policy statement, due after the meeting, for insight into the direction of the economy.
A number of stocks were pressured by fresh disclosures of government investigations. According to media reports, the Securities and Exchange Commission is probing trading practices at brokerages including Morgan Stanley, Merrill Lynch and Charles Schwab, believing that the brokerages processed trades to benefit themselves rather than their clients.
Microsoft announced a 536 million dollars settlement with Novell over alleged anti-competitive practices in Europe. However, Novell said it would fill its own US case against Microsoft this week.
Investors were encouraged by McDonald’s sales report for October, which saw a 7% increase in fast food outlets open at least a year.
Declining issues outnumbered advancers by nearly 3 to 2 on the New York Stock Exchange, where volume was moderate.
The Russell 2000 index of smaller companies closed down 2.21% at 602.08.