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Stocks little changed as dollar strengthens
Source: Agencies |
December 31, 2009, Thursday
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STOCKS ended the next-to-last day of 2009 little changed as welcome news on manufacturing helped offset a drop in commodities prices.
The market drew support yesterday from a key economic indicator that signaled growth in the Midwest manufacturing industry for a third straight month. The Chicago Purchasing Managers Index rose to 60 in December from 56.1 in November. The report showed that production and new orders increased and employment improved.
A rising dollar and light volume held the market's gains in check. A jump in the dollar makes commodities, and thus the shares of companies that produce commodities, less attractive to foreign buyers. It also hurts the profits of companies that do business overseas.
Some investors have been buying the dollar in recent weeks on the belief that the economy is improving and the Federal Reserve will raise interest rates in the next year. That buying interest comes after a months-long slide in the greenback.
Rock-bottom interest rates have encouraged investors this year to move out of cash and into riskier assets such as stocks and commodities that have the potential to earn bigger returns. While a rise in interest rates would be a sign that the economy is on the right track, it could hurt the stock market's advance.
After a 24.7 percent rise in the Standard & Poor's 500 index this year, many investors have closed their books and are making few moves ahead of the start of 2010. Fewer traders in the market can lead to more volatility.
"We've seen oil up and down, the dollar up and down, the market up and down," said Frank Ingarra, co-portfolio manager at Hennessy Funds.
The Dow Jones industrial average rose 3.10, or less than 0.1 percent, to 10,548.51. The Standard & Poor's 500 index rose 0.22, or less than 0.1 percent, to 1,126.42, while the Nasdaq composite index rose 2.88, or 0.1 percent, to 2,291.28.
The modest moves come a day after stocks broke a six-day winning streak as reports on home prices and consumer confidence failed to rally investors.
The ICE Futures U.S. dollar index, which measures the dollar against other major currencies, rose 0.1 percent. Gold and other metals fell. Oil prices rose after the government reported that the nation's crude supply fell for a fourth week in a row. Light, sweet crude added 41 cents to settle at US$79.28 a barrel on the New York Mercantile Exchange.
Bond prices were mixed following an auction of seven-year notes, the last of the government's issuances this week. In total, the Treasury auctioned US$118 billion in debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.79 percent from 3.80 percent. Interest rates on many consumer loans track the yield on the 10-year Treasury.
There were also plenty of reminders yesterday that companies are still hurting from the blows of the recession.
The government was preparing to extend another multibillion loan to GMAC Financial Services to further stabilize the auto financing company, according to a person familiar with the matter. GMAC, instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC, has already received US$12.5 billion in taxpayer money and is 35 percent owned by the federal government. The person, who spoke on condition of anonymity because discussions weren't complete, said the bailout would be in the range of about US$3 billion.
Meanwhile, Aetna Inc. said it expects to take a fourth-quarter charge of up to US$65 million to cover the costs of layoffs and consolidations. Shares of the health insurer fell 71 cents, or 2.2 percent, to US$32.15.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to an anemic 644.4 million shares.
In other trading, the Russell 2000 index of smaller companies rose 0.23, or less than 0.1 percent, to 633.41.
The market drew support yesterday from a key economic indicator that signaled growth in the Midwest manufacturing industry for a third straight month. The Chicago Purchasing Managers Index rose to 60 in December from 56.1 in November. The report showed that production and new orders increased and employment improved.
A rising dollar and light volume held the market's gains in check. A jump in the dollar makes commodities, and thus the shares of companies that produce commodities, less attractive to foreign buyers. It also hurts the profits of companies that do business overseas.
Some investors have been buying the dollar in recent weeks on the belief that the economy is improving and the Federal Reserve will raise interest rates in the next year. That buying interest comes after a months-long slide in the greenback.
Rock-bottom interest rates have encouraged investors this year to move out of cash and into riskier assets such as stocks and commodities that have the potential to earn bigger returns. While a rise in interest rates would be a sign that the economy is on the right track, it could hurt the stock market's advance.
After a 24.7 percent rise in the Standard & Poor's 500 index this year, many investors have closed their books and are making few moves ahead of the start of 2010. Fewer traders in the market can lead to more volatility.
"We've seen oil up and down, the dollar up and down, the market up and down," said Frank Ingarra, co-portfolio manager at Hennessy Funds.
The Dow Jones industrial average rose 3.10, or less than 0.1 percent, to 10,548.51. The Standard & Poor's 500 index rose 0.22, or less than 0.1 percent, to 1,126.42, while the Nasdaq composite index rose 2.88, or 0.1 percent, to 2,291.28.
The modest moves come a day after stocks broke a six-day winning streak as reports on home prices and consumer confidence failed to rally investors.
The ICE Futures U.S. dollar index, which measures the dollar against other major currencies, rose 0.1 percent. Gold and other metals fell. Oil prices rose after the government reported that the nation's crude supply fell for a fourth week in a row. Light, sweet crude added 41 cents to settle at US$79.28 a barrel on the New York Mercantile Exchange.
Bond prices were mixed following an auction of seven-year notes, the last of the government's issuances this week. In total, the Treasury auctioned US$118 billion in debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.79 percent from 3.80 percent. Interest rates on many consumer loans track the yield on the 10-year Treasury.
There were also plenty of reminders yesterday that companies are still hurting from the blows of the recession.
The government was preparing to extend another multibillion loan to GMAC Financial Services to further stabilize the auto financing company, according to a person familiar with the matter. GMAC, instrumental to the operations of automakers General Motors Co. and Chrysler Group LLC, has already received US$12.5 billion in taxpayer money and is 35 percent owned by the federal government. The person, who spoke on condition of anonymity because discussions weren't complete, said the bailout would be in the range of about US$3 billion.
Meanwhile, Aetna Inc. said it expects to take a fourth-quarter charge of up to US$65 million to cover the costs of layoffs and consolidations. Shares of the health insurer fell 71 cents, or 2.2 percent, to US$32.15.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to an anemic 644.4 million shares.
In other trading, the Russell 2000 index of smaller companies rose 0.23, or less than 0.1 percent, to 633.41.
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