Chinese cheer fades across Wall Street
The Nasdaq closed lower and ended eight straight days of gains yesterday while the Dow and S&P 500 ended flat as optimism faded over China’s move to tame its growth.
The Dow Jones industrial average gained 18.24 points, or 0.16 per cent, to end at 11,428.56, well off its intraday high of 11,480.03. The Standard & Poor’s 500 Index inched up a mere 0.06 of a point to finish at 1,240.46. But the Nasdaq Composite Index was down 12.63 points, or 0.48 per cent, to close at 2,624.91.
The lightly traded session came as some technical indicators suggested a near-term pullback could be in the cards. About 7.32bn shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, well below the year’s daily average of 8.62bn.
Stocks earlier had risen as optimism China would not aggressively head off growth boosted energy and materials stocks. Companies that sell oil, like Chevron Corp, and those that make mining equipment, like Caterpillar, drove the Dow higher. At the close, both Caterpillar and Chevron were up 1.5 per cent or more. The PHLX oil service index rose 1.3 per cent.
Investors had feared China would raise interest rates to slow growth, but instead it merely increased the amount of extra capital top banks must hold, a less severe move by the world’s second-largest economy.
“Even though [China] isn’t fueling us 100 per cent, if it was to tighten, that would mean less strength in a weak recovery here,” said Jeffrey Friedman, senior market strategist at Lind-Waldock.
Healthcare stocks jumped briefly on news that a Virginia judge invalidated a key part of the March healthcare overhaul championed by President Obama, but these shares quickly fell back. After rising as much as 1.6 per cent, the Morgan Stanley Healthcare Payor Index slipped 0.3 percent.
The S&P 500 reached another high for the year yestersday, advancing to an intraday peak at 1,246.73. The index’s steady climb since breaching 1,228 — a key retracement of the 2007-2009 bear market losses — has been judged a sign of further gains, even as the relative strength index suggests stocks are nearing an overbought condition.
“We’ve had a decent run up over the last week or so and the market started out strong, but we saw a bit of profit-taking at the end,” said Giri Cherukuri, head trader at Oakbrook Investments LLC.