Sep 12, 2009
US stocks broke their five-day winning streak on Friday, after declining oil prices sapped the energy out of the rally and left investors worried about the long-mooted September pull-back.
Dollar weakness combined with rising oil and gold prices this week helped the market to its highest closing levels since last October. But light trading volume suggested investors were reluctant to commit themselves after analysts had predicted equities would fall after the summer’s rally.
“After a huge run over the last couple of days, the market is a bit overbought so everybody is waiting for a pull-back,” said Doug Roberts, chief investment strategist at Channelcapitalresearch.com.
After the oil price sunk back below the psychologically significant $70 level, stocks erased their early gains. The S&P 500 closed 0.1 per cent lower at 1,042.73 points after gaining 2.6 per cent this week.
The Nasdaq fell 0.2 per cent to 2,080.90 points but it has still outperformed the other indices in recent sessions and was up 3.1 per cent for the week.
The Dow Jones Industrial Average lost 0.2 per cent to end the session at 9,605.41 and was up this week by 1.7 per cent.
After strong performances in the week, the energy and materials sector also dragged the market down but industrial stocks stayed strong. During the week, General Electric powered the sector after JPMorgan upgraded the stock and Goldman Sachs raised its price target on the company the day after.
Its shares fell back 0.9 per cent to $14.67 but were up 5.8 per cent for the week.
Fedex delivered a further boost to the sector on Friday. The second-largest US package-shipping group, considered a gauge of economic activity, rallied 6.4 per cent to $77.32 after announcing earnings would exceed its forecast.
The financial sector, however, was in negative territory from the outset.
American International Group was downgraded by Wells Fargo Securities, which said the company had no tangible book value.
Its shares, which have lost 7.5 per cent this week in spite of the market’s rally, fell 0.8 per cent to $37.55. Morgan Stanley was one of the few gainers in the sector. The shares rose 0.6 per cent to $28.82 after it said John Mack, chief executive, would step down and be replaced by James Gorman, head of retail brokerage.