Eerie calm on Wall Street as equities stall
THE Standard & Poor’s 500 extended its rally to a fifth day yesterday, again eking out a tiny gain as lingering expectations for economic stimulus from central banks lent support to a market lacking new catalysts.
The Dow Jones industrial average slipped 10.45 points, or 0.08 per cent, to 13,165.19 at the close. But the Standard & Poor’s 500 Index inched up 0.58 of a point, or 0.04 per cent, to 1,402.80. The Nasdaq Composite Index gained 7.39 points, or 0.25 per cent, to close at 3,018.64.
While the S&P 500 has chalked up three-month highs every day this week, the index has climbed only 0.6 per cent over the past three sessions – an indication that investors aren’t prepared to make aggressive bets despite better-than-expected jobless claims and US trade data.
The Nasdaq outperformed the other two major US stock indexes, led by Cisco Systems after Goldman Sachs added the company to its conviction buy list and Piper Jaffray upgraded it.
Material stocks also advanced after James River Coal said the market for power-generating coal was showing signs of a recovery following massive industry-wide cutbacks in production. The stock surged 13 per cent.
The US stock indexes seesawed throughout the morning in light trade as investors bet central banks would soon act to support a global recovery that has shown signs of stalling.
“It’s almost eerie how flat the market has been. But while there’s a risk of our becoming overbought, I don’t see why we’d see a decline of any magnitude until we hear what central banks will do,” said Mark Luschini of Janney Montgomery Scott.
Markets held on despite a raft of weak Chinese economic data. Annual growth in factory output slowed to its lowest in more than three years in July while annual consumer price inflation hit a 30-month low.
“This news is disappointing, but it only emboldens investors that we’ll be rescued by central banks somewhere,” said Luschini, who helps oversee $54 billion in assets.
Data showed the number of Americans filing new claims for jobless benefits fell last week while the U.S. trade deficit in June was the smallest in 1-1/2 years, hopeful signs for the struggling economy.