Stocks finished Friday slightly lower, closing a week of zigzag trading that saw a steep sell-off early in the week, then a dramatic rebound.
Traders paused after a two-session rally undid weeks of selling that had erased the gains in the major indexes for the year. The Dow Jones industrial average gained 110 points Wednesday and nearly 200 points Thursday. It was the index’s best two-day run since April 2003.
“The mentality of the market is one in which investors are looking to sell into strength,” said Mike Malone, trading analyst, Cowen & Co. “You’re seeing a little bit of profit taking today coming off yesterday’s move up.”
The day’s economic data was robust. The deficit in the broadest measure of foreign trade showed an unexpectedly large improvement during the first three months of this year, but soaring global oil prices are expected to limit such gains.
In other economic news, the University of Michigan’s reading of U.S. consumer sentiment improved a little in early June, rising from 79.1 to 82.4.
Inflation-wary traders chose to hang onto Thursday’s comments by Federal Reserve Chairman Ben Bernanke that record energy and commodity prices could account for some of the recent uptick in core prices but that inflation expectations have remained within historical ranges.
The Dow Jones industrial average finished the seesaw session down 0.64 point, or 0.01 percent, but above the emotionally-key 11,000 mark that it finished above for the first time since June 6 on Thursday. After shedding 186 points on Monday and Tuesday to fall into the red for the first time this year, the Dow is now back in positive territory for 2006.
The broader Standard & Poor’s 500-stock index fell 4.62 points, or 0.37 percent, while the Nasdaq composite index gave up 14.20 points, or 0.66 percent. The index remains in negative territory for the year.
The U.S. dollar was higher against other major currencies. Gold prices also rose. Crude oil futures inched up. A barrel of light crude settled at $69.88, up 38 cents on the New York Mercantile Exchange.
After two days of steep losses, the market’s recovery Wednesday and Thursday helped the major indexes recover somewhat, and gave hope to investors looking for an end to Wall Street’s month-long slide. For the week, the Dow gained 1.13 percent, while the S&P 500 was off 0.05 percent and the Nasdaq lost 0.24 percent.
The question for investors now is whether the stock market’s late-week rally is sustainable.
“Nothing has happened from the fundamental perspective to change the basic fears that have haunted the market since May,” said Russ Koesterich, senior portfolio manager at Barclays Global Investments in San Francisco. “Inflation is accelerating, there’s tighter monetary policy not just here but internationally and this is going to cause investors to sell riskier assets.”
In corporate news, The Home Depot Inc. fell 30 cents to $37.07 after it found about $10 million in unrecorded stock option expense. Home Depot, the nation’s largest home improvement store chain said the amount is not material and it does not plan to restate any of the past year’s financial results.
Shares of Oracle Corp. jumped 49 cents to $14.19 after the business software maker said it would beat analyst expectations with a better-than-expected fourth-quarter profit. Oracle made the announcement after the close of trading Thursday.
Shares of software powerhouse Microsoft Corp. rose 3 cents to $22.10 on news that co-founder Bill Gates will leave his day-to-day responsibilities at the company by July 2008. (MSNBC.com is a joint venture of Microsoft and NBC Universal News.)
Lower second-quarter earnings from Carnival Corp., the world’s largest cruise operator, still beat analysts’ estimates and company projections and the stock rose $2.02 to $40.19. The company also reaffirmed its full year forecast.
Adobe Systems Inc. rose 16 cents to $29.12 despite a weak second quarter after Oppenheimer upgraded the software company’s shares to “buy” from “neutral.”
Final consolidated volume on the New York Stock Exchange was 2.98 billion shares, up from 2.99 billion the previous session.
The Russell 2000 index of smaller companies fell 7.98, or 1.14 percent, to 693.07.
Overseas, Japan’s Nikkei stock average continued to rebound from eight-month lows hit earlier this week, rising 2.82 percent. Britain’s FTSE 100 fell 0.39 percent, Germany’s DAX index dropped 0.85 percent, and France’s CAC-40 lost 0.63 percent.