US stocks lagged yesterday as technical measures suggested a five-month rally was growing long in the tooth.
Investors were reluctant to make big bets even though a report showed US private employers added more jobs than expected in January.
The S&P 500 started to look overbought again after reaching two and a half year highs on Tuesday. A key measure of the rally’s strength suggests stocks are vulnerable to a correction, analysts said.
The Dow Jones industrial average rose 1.81 points, or 0.02 per cent, at 12,041.97. The Standard & Poor’s 500 Index was down 3.56 points, or 0.27 per cent, at 1,304.03. The Nasdaq Composite Index was down 1.63 points, or 0.06 per cent, at 2,749.56.
Investors yesterday kept an eye on protests in Egypt as violent street clashes erupted. Concerns that protests could spread to other countries in the region have pressured equities in recent sessions.
The Market Vectors Egypt Index ETF, which consists of shares of companies in Egypt, fell 3.7 per cent after rising for two consecutive days.
Joseph Hargett, a strategist at Schaeffer’s Investment Research, said the Dow needs to stay above 12,000 firmly as a show of short-term support. “The resistance now resides in the 12,100 - 12,200 area.”
After a pullback late last week, the S&P 500 has started to look overbought by some measures. The index is more than one standard deviation above its 50-day moving average and the weekly relative strength index is above 70.
Trading volumes were not seriously affected by a harsh winter storm that brought parts of the US Midwest to a standstill.
The story was different for futures traders in Chicago, which took much of the brunt of the storm.
“It’s definitely light downtown here. Pit trading opened late too... We’re about half-staffed,” said Frank Lesh, a futures analyst and broker at FuturePath Trading in Chicago, where over 20 inches of snow had fallen.
Volume on the NYSE, Amex and Nasdaq reached 7.26bn shares compared to last year’s daily average of about 8.47bn.
Appliance maker Whirlpool dropped 2.1 per cent to $83.60 after its profit missed estimates.
Time Warner and Mattel rallied after both companies reported stronger-than-expected quarterly profits.
Media group Time Warner gained 8.6 per cent to $35.10 while toymaker Mattel was up 0.9 per cent to $24.37.