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Market churn
could continue
NEW YORK >> Investors uncertain about the direction of the economy sent stocks fluctuating throughout an erratic session yesterday, with prices ending mixed. Blue chip stocks finished higher while tech stocks extended their slide.
The market struggled to interpret the latest reading on manufacturing from the Institute of Supply Management. Although the group's index of business activity reached a healthy 63.6 in January, up from 63.4 in December, the figure was slightly off analysts' expectation of 64, and many investors were disappointed. Stocks did manage a rally during the afternoon, but for the most part, only the big-name stocks held their gains.
Such ambivalence was perhaps to be expected in a market that has seen two weeks of declines after having reached its highest levels since 2001.
"Stocks rose between mid-November and mid-January at an annualized rate of almost 80 percent per annum," said Rod Smyth, chief investment strategist for Wachovia Securities. "This market clearly cannot sustain this kind of growth, no matter how good earnings may be. You're going to see a lot of churning like this over the next couple of months."
The Dow Jones industrial average finished up 11.11, or 0.1 percent, at 10,499.18, after losing more than 50 points in the morning and posting more than 80 points of gains in the afternoon.
Broader stock indicators were mixed. The Standard & Poor's 500 index was up 4.13, or 0.4 percent, at 1,135.26, and the Nasdaq composite index finished down 3.00, or 0.2 percent, at 2,063.15.
The price of the Treasury's 10-year note closed down 3/32 point, while its yield rose to 4.15 percent from 4.14 percent Friday. Two-year Treasury notes were up 1/32 point and yielded 1.80 percent, down from 1.82 percent Friday.
Analysts said some of the afternoon buying was because of investors who realized that earnings reports released over the past two weeks were probably better than they initially thought.
"Overall, we've got earnings coming in that are ahead of consensus and great underlying economic fundamentals," said Scott Wren, equity strategist for A.G. Edwards & Sons. "There's a lot of retail investors who missed a lot of this run and so you have a lot of jump on the bandwagon mentality to help you recover."
Investors were also encouraged by an influx of cash, because of a top-tier firm pulling money out of bonds and putting it in stocks, according to Keith Keenan, vice president of institutional trading at Wall Street Access. It was not immediately clear which firm carried out the transactions.
International Paper Co. reported a fourth-quarter profit of 23 cents per share before one-time charges, beating Wall Street expectations by 5 cents. Its shares rose 24 cents at $42.51.
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