Stocks go flat after Dow pierces 11,000
NEW YORK » Stocks closed almost flat yesterday, as the day's early declines threatened to halt the market's January rally one day after the Dow Jones industrial average closed above 11,000 for the first time since June 2001.
Disappointing earnings from Alcoa Inc., the first of the 30 Dow industrials to report, disturbed investors. The Dow fell more than 44 points in opening trading, but rebounded in the afternoon to close nearly even. The Nasdaq composite rose slightly after Apple Computer Inc. hit a 52-week high.
The mixed day came after a surge in buying during the first five trading days of 2006 that sent all the major indexes to at least four-and-a-half year highs. The rally took off after the Federal Reserve signaled the central bank was near the end of its streak of short-term interest rate hikes.
"This has been one of the strongest starts of the year we've had in many years," said Linda Duessel, market strategist at Federated Investors in Pittsburgh. "You shouldn't expect it to keep on going."
With the market priced as it is, she said, "we're more beholden to earnings and earnings outlooks. We could set ourselves up for disappointment if earnings don't come in in a positive way."
The Dow Jones industrial average slipped 0.32, or nearly zero percent, to 11,011.58. The average of 30 blue-chip stocks gained 52.59 Monday to close at 11,011.90. The last time the Dow finished above 11,000 was June 7, 2001, when it closed at 11,090.74.
Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index fell 0.46, or 0.04 percent, to 1,289.69, and the Nasdaq composite index rose 1.63, or 0.07 percent, to 2,320.32.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.43 percent from 4.38 percent late Monday. The U.S. dollar was little changed other major currencies. Gold prices fell after briefly reaching their highest level in 25 years.
Crude oil futures fell after rising on concerns that Iran was restarting its nuclear program and would further destabilize the Middle East. A barrel of light crude settled at $63.37, down 13 cents, on the New York Mercantile Exchange.
Yesterday's only meaningful economic data was the Commerce Department's November wholesale inventory report, which, excluding petroleum products, was nearly flat.
"I think this is a one-day pause," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. "I'd be really surprised if this was all there is to this rally. ... I don't see anything in the tape today that leads me to think this trend should be over."