Star-Bulletin news services
Stocks finished mixed
NEW YORK >> The Dow Jones industrials and Standard & Poor's 500 snapped their five-day winning streak today as investors gave in to temptation and cashed in their profits. Tech stocks gained on positive reports from the gross domestic product and jobless claims.
Analysts said a string of largely upbeat economic data in recent days reinforced investor perception that the recovery is back on track, but many believed stocks were due for a pullback after its recent rally.
"The market's been acting well, and people in general feel good about that," said Barry Berman, head trader for Robert W. Baird & Co. "But I think the market's gotten the feeling it's overbought."
"The market never goes straight up and it never goes straight down," he added. "Certainly a pullback would not be unusual ... and it does not necessarily mean the rally is over."
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange. Volume was heavy.
The Dow fell 81.94, or 0.9 percent, to 8,711.18, following a five-day gain of 301 points. Earlier in the day, the blue chips rose as much as 69 points.
The broader market finished mixed. The Nasdaq composite index rose 11.71, or 0.8 percent, to 1,574.95, after a four-day gain of 73 points. The Standard & Poor's 500 index fell 3.58, or 0.4 percent, to 949.64, having risen 33 points in the previous five sessions. The Russell 2000 index rose 2.16, or 0.5 percent, to 432.64.
The price of the Treasury's 10-year note closed up 21/32 point, while its yield fell to 3.34 percent from 3.43 percent yesterday. Two-year Treasury notes were up 1/16 point and yielded 1.27 percent, down from 1.31 percent yesterday.
The Commerce Department reported that the U.S. economy grew in the first quarter at an annual rate of 1.9 percent. The latest reading on the gross domestic product was slightly higher than the 1.6 percent growth rate estimated a month ago. The figure matched analysts' expectations.
Meanwhile, the Labor Department said new claims for unemployment benefits dropped last week by a seasonally adjusted 9,000 to 424,000. Still, even with the decline, claims were above the 400,000 mark, a level associated with a weak job market.
Stocks have surged in recent weeks, pushing the three main gauges toward their third straight month of gains on better-than-expected earnings. But some analysts caution that the market could lose some momentum if investors don't see sustained evidence of an economic rebound.
"As we get further along, people are getting comfortable with the fact the market is where it is," said Tim Smalls, trader at SG Cowen Securities. "We've got historically low interest rates and zero inflation. That in and of itself bodes well for the economy and the market."
But he added that stocks might be near the upper end of their range for the next several weeks. "I think the market will peak at 8,800, 8,900," Smalls said.
Dollar General rose $1.50 to $18.03 after the discount retailer reported first-quarter profits that beat Wall Street's estimates by 2 cents per share.
Overseas, Japan's Nikkei stock average finished 1.7 percent higher. In Europe, France's CAC-40 rose 0.7 percent, Britain's FTSE 100 rose 0.3 percent and Germany's DAX index fell 0.4 percent.
STOCK QUOTES/CHARTS/DATA
