Nasdaq dives 29, Dow shaves 39
NEW YORK » Wall Street's hopes of prolonging its year-end rally suffered another blow yesterday as cautious traders sold off stocks and the technology sector posted a steep decline.
The market opened little changed but turned lower at midday despite a court victory for Pfizer Inc. and a multibillion acquisition by FPL Group Inc. Google Inc.'s investment in America Online and strong earnings from Circuit City Stores Inc. were unable to lift tech shares, which have slid sharply lower in recent days.
A lack of economic news left investors with limited guidance and made them anxious to take profits at any sign of a downturn on the market. Critical data on gross domestic product, housing and consumer spending later this week could determine if stocks make one final push higher before January.
Low trading volume is expected this week ahead of the holidays, said Rick Pendergraft, an equity trader at Schaeffer's Investment Research. He added that the market may still be holding back after the November rally pressured many to buy stocks.
"Traditionally, the week after Christmas is typically pretty strong," Pendergraft said. "But given how much we've run up since October, I don't know if you should expect the same kind of gains."
The Dow Jones industrial average dropped 39.06, or 0.36 percent, to 10,836.53, after spending most of the day in positive territory.
Broader stock indicators also finished lower. The Standard & Poor's 500 index sank 7.40, or 0.58 percent, to 1,259.92, and the Nasdaq composite index plunged 29.74, or 1.32 percent, to 2,222.74.
Crude futures saw a second day of losses as warm weather persisted throughout the Northeast and reduced expectations for a spike in heating-fuel demand. A barrel of light crude fell 72 cents to settle at $57.34 on the New York Mercantile Exchange.
So far this month, Wall Street has seen a familiar pattern of whittling down early gains and finishing with losses as traders lock in short-term profits. Some investors held onto hopes that stocks might see one last runup after soaring to multiyear highs in late November, but several weeks of aimless trading have nearly zapped the market's momentum. Traders have been jumping at any chance to lock in gains for the year.
"For two, almost three weeks, people have been saying the market is too high," said Bill Groenveld, head trader for vFinance Investments. "They're looking for the pullback. At any point we start our way back, people say, 'Here's our pullback.'"