A late-session sell-off left stocks narrowly mixed Thursday, as cautious investors took what little profits they could from a disappointing week marked by an interest rate hike and inflation concerns.
Economic data pointing to modest growth gave investors enough courage to find bargains after the week’s sell-off. With orders for durable goods — those made to last more than three years — rising by just 0.3 percent in February, investors felt that demand was sluggish enough to forestall rising prices.
But the last hour of trading ahead of the Good Friday holiday saw a pullback in an already weak relief rally, prompted in part by rising crude oil prices. Analysts said many investors remain skeptical that the Federal Reserve’s interest rate hikes will stem inflation without damaging the economy.
“The market was in a severely oversold condition because of all these inflation fears,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. “But I still think there’s a bumpy road ahead for a while. The market really needs assurances that the Fed will be able to keep ahead of inflation.”
The Dow Jones industrial average was off 13.15 points, or 0.1 percent, at the close of trading, while the broader Standard & Poor’s 500-stock index was down 1.11 points, or 0.1 percent. The Nasdaq composite index added 0.84 point, or 0.04 percent.
The stock market tumbled to its third straight week of losses after the Federal Reserve on Tuesday confirmed that inflationary pressures were building within the economy. Many on Wall Street now believe that higher interest rate hikes, beyond the customary quarter percentage point increases since the summer, could be coming as early as May.
For the week, the Dow lost 1.8 percent, the S&P 500 index fell 0.8 percent and the Nasdaq Composite slid 1.5 percent.
Many financial markets around the world, including the U.S. markets, will be closed on Friday in observance of Good Friday.
After oil prices dropped 4 percent earlier in the week, crude oil staged a recovery Thursday. A barrel of light crude settled at $54.84, up $1.03, on the New York Mercantile Exchange. Bonds were narrowly higher, with the yield on the 10-year Treasury note falling to 4.59 percent, down from 4.6 percent on Wednesday. The dollar rose against world currencies, while gold prices edged lower.
With inflation fears confirmed by the Federal Reserve earlier in the week, Wall Street will be looking out for modest economic data to show that the economy will grow at a slow enough pace to forestall inflation, but at a fast enough pace to bolster corporate earnings reports. First quarter earnings reports will begin coming in during the second week of April.
“If you look at the data, the economy is doing just fine, and we expect that to continue,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. “But you see a market that’s been sold off dramatically. The key is interest rates, in that hopefully they will strengthen the dollar without causing too much harm to all the debt that companies and consumers have out there.”
General Electric Co. gained 23 cents to $35.73 after it increased its profit forecasts for the first-quarter and the full year. The Dow industrial also said it has priced the secondary offering of 80.5 million shares of Genworth class A common stock at $26.50 per share. GE will own 52 percent of the outstanding shares after the offering.
Northrop Grumman increased its earnings-per-share estimates for 2005, crediting its sale of TRW Automotive Holdings Corp. shares. The defense contractor’s board also raised its quarterly cash dividend by 13 percent to 26 cents. Northrop Grumman was up 53 cents at $53.31.
Internet services company Yahoo! Inc. added 54 cents to $31.41 after its board approved a $3 billion stock repurchase program. The buybacks will be spread out over the next five years.
A jury awarded Lexar Media Inc., maker of computer memory and components, $380 million in damages after finding that Toshiba Corp. and a U.S. subsidiary stole trade secrets from the company. Shares of Lexar, which was due to report earnings after the session, more than doubled, rising $3.15 to $6.32.
Shareholders of Kmart Holding Corp. and Sears Roebuck & Co. approved Kmart’s $12.3 billion takeover of the venerable department store chain. Sears shareholders could take a half-share of the new company’s stock or $50 in cash for each Sears share. The deadline for a stock swap has expired, however, leaving remaining Sears shareholders the lone option of taking the cash. The company said that was why Sears shares fell $6.76 to $50.04. Kmart rose $7.69 to $132.52. The combined company, Sears Holdings Corp., will begin trading Monday on the Nasdaq Stock Market.
Overseas, Japan’s Nikkei stock average rose 0.06 percent. In Europe, Britain’s FTSE 100 closed up 0.25 percent, France’s CAC-40 climbed 1.14 percent for the session, and Germany’s DAX index gained 0.61 percent.