Despite gains by key technology stocks Dell (DELL) and Intel (INTC) on Friday, the Dow Jones Industrial Average (DJI) suffered its first loss after eight consecutive gains. After opening higher, prices sagged on news that consumer confidence levels were lower in August than in July.
Boeing (BA) lost part of Thursday’s [Aug. 27] big gain, falling 1.8% versus a rise of 8.4% on Thursday.
But it was the health care sector that took the brunt of the selling. All three of the Dow’s drug stocks fell: Merck (MRK) took a 1.9% hit, Johnson and Johnson (JNJ) fell 0.33%, and Pfizer (PFE) was down 0.3%.
The Reuters/University of Michigan consumer sentiment index slipped to 65.7 in August, down from 66 in July. But the Commerce Department said that consumer spending rose slightly in July, and that personal income was unchanged.
At the close, the Dow was down 36 points to 9,544, and the S&P 500 (SPX) lost 2 points to 1,029, but the Nasdaq (NASD) rose a point to 2,029.
The NYSE traded just less than 1.2 billion shares with advancers slightly ahead of decliners. On the Nasdaq, 702 million shares changed hands with decliners ahead by almost 2-to-1.
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For the week, the Dow gained 0.4%, the S&P 500 rose .03%, and the Nasdaq gained 0.4%.
October crude oil rose 25 cents to $72.74 a barrel, and the Energy Select Sector SPDR (XLE) fell 11 cents to $52.18.
December gold rose $11.50 to settle at $958. 80 an ounce. The PHLX Gold/Silver Index (XAU) gained $2.69 to $150.49.
What the Markets Are Saying
After eight days of gains, no one should be surprised by a slight degree of exhaustion that could result in a minor pullback. And buyers still hover in the wings waiting for the slightest opportunity to snatch up bargains.
Therefore, I don’t look for anything more than an initial pullback to Dow 9,130 to 9,400 and S&P 980 to 1,010.
But, technically speaking, the most dominate feature of both the Dow and the S&P charts is the resistance line drawn from the May to June to August highs. Both indices have been hugging the line by posting new intraday highs almost daily.
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This sort of action is reminiscent of the April-December 2003 resistance line, which finally gave way with a mighty rally that ran the Dow for another 500 points from 10,000.
The saying “Sell in May and go away” has already been shown not to have applied this year. MarketWatch reports that, since 1950, the worst two months in which to invest are August and September. Well, we’ve already smashed through August with one of the best performances on record. Perhaps September will also disprove the historical data and reward stockholders with another hefty gain.
Today’s Trading Landscape
Earnings are expected today from Alloy (ALOY), China Mass Media (CMM), Culp Inc. (CFI), PKN Orlen (PKN.WA) and SINA Corp. (SINA).
The only significant economic report due today is the Chicago PMI.
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