NEW YORK, June 6 — US stocks flip-flopped throughout yesterday’s session, with the major indexes ending split as investors paused to consider conflicting signals in monthly US jobs data.
Investors also sold some recent winners to take some profits from the spring rally, which has driven the S&P 500 up almost 40 per cent from its 12-year closing low on March 9.
Trading was choppy as the stock market initially started higher and then drifted lower as investors reassessed the implications of the latest jobs report.
The Labour Department reported that employers cut 345,000 jobs in May — substantially less than analysts had forecast — but the US unemployment rate hit 9.4 per cent, its highest since 1983.
The data underscored that the US economic picture remained uncertain even after some recent signs of improvement.
“There was a mixed bag from the economic news,” said Ryan Detrick, senior technical strategist at Ohio-based Schaeffer’s Investment Research.
“Initially people saw the 345,000 number and everyone got a little excited, then realised the unemployment rate was worse than expected, and there’s the fact that it’s Friday (yesterday) and the sellers took advantage to take some profits.”
The Dow Jones industrial average gained 12.89 points, or 0.15 per cent, to 8,763.13. The Standard & Poor’s 500 Index declined 2.37 points, or 0.25 per cent, to 940.09. The Nasdaq Composite Index dipped 0.60 of a point, or 0.03 per cent, to 1,849.42.
GRAB THAT UMBRELLA
Investors opted to book profits from the market’s recent winners — financial, energy, materials and tech shares.
Shares of JPMorgan dropped 2.3 per cent to US$34.55 (RM120.86) on the New York Stock Exchange, while Citigroup slid 3.1 per cent to US$3.46 as it wrapped up its final full week as a Dow component.
The day after tomorrow, effective at the start of trading, Citigroup will be replaced in the blue-chip Dow average with Travelers. The large insurance company, known for its red umbrella logo, was once one of the crown jewels in the Citigroup empire before the financial giant was rocked by the credit crisis.
General Motors, once the world’s largest automaker and long a stalwart among the Dow components, also is being kicked out of the Dow industrials following its bankruptcy filing on Monday, June 1.
So after the weekend, when trading resumes in two days time, GM will be replaced in the Dow by Cisco Systems Inc, which makes the routers that drive the Internet. Yesterday, Cisco’s stock jumped 1 per cent to close at US$19.87 on Nasdaq.
In yesterday’s session, investors also unloaded some shares of major oil company Chevron Corp, down 0.6 per cent at US$69.37, and Newmont Mining, the world’s No. 2 gold producer, down 5.5 per cent at US$44.84, to book some profits from the stocks’ recent run higher in sync with the market’s rally and rising commodity prices.
DOW FLIRTS WITH GAIN FOR YEAR
During yesterday’s seesaw trading, the Dow flirted once again with turning positive for the year — rising 1 per cent to a session high at 8,839.40; that advance brought the Dow up 63.01 points or 0.72 per cent from its year-end 2008 close.
By the end of the day, though, the Dow had cut its gains but still ended just 13.26 points, or 0.15 per cent, from the break-even point. Earlier this week, the Dow made at least two fleeting attempts intraday to rise above its Dec. 31, 2008, close at 8,776.39.
The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street’s favorite gauge of investor fear, declined on Friday to end below the psychologically important level of 30. The VIX ended at 29.62, down 1.86 per cent.
Despite a subdued session, all indexes registered their third straight weekly advance. The Dow rose 3.1 per cent and the S&P 500 gained 2.3 per cent, while the Nasdaq climbed 4.2 per cent.
On Nasdaq, Intel Corp, the world’s top chip maker, was one of the biggest drags, falling 1.3 per cent to US$15.92 after an industry group forecast a steep drop in global chip sales.
The semiconductor index dropped nearly 2 per cent.
Even so, those investors betting on a turnaround in global economic prospects snapped up shares of big manufacturers and exporters, including aircraft maker Boeing Co, up 4.1 per cent at US$52.65. United Technologies Corp climbed 2.3 per cent to US$56.39.
Shares of Wal-Mart Stores Inc, a Dow component, added 0.4 per cent to US$51.07 after the world’s biggest retailer unveiled a US$15 billion stock-buyback plan.
As a discount retailer, Wal-Mart is one of the companies expected to thrive in a downbeat economy.
Yesterday’s volume was moderate on the New York Stock Exchange, where about 1.26 billion shares changed hands, below last year’s estimated daily average of 1.49 billion. On the Nasdaq, about 2.32 billion shares traded, above last year’s daily average of 2.28 billion.
Despite the Dow’s modestly higher finish, decliners slightly outnumbered advancers by 1,539 to 1,460 on the NYSE. On Nasdaq, about five stocks fell for every four that rose. — Reuters
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