By Anora Mahmudova and Barbara Kollmeyer, MarketWatch Energy
sector stocks sell off
NEW YORK (MarketWatch) -- U.S stocks ended Thursday's mixed
trading activity slightly higher, but a continued sell-off in
energy stocks, due to falling oil prices, weighed on the S&P
500.
The Dow Jones Industrial Average (DJI) gyrated between gains and
losses, but ended the session at a fresh record high -- recording
its 25th record closing high this year. The blue-chip index gained
40.59 points, or 0.2%, to 17,654.79, with nearly all of the gains
coming from Wal-Mart Stores Inc. and Boeing Company.
The S&P 500 (SPX) eked out a 1-point gain to close at
2,039.33, as energy sector stocks weighed on the index.
The Nasdaq Composite (RIXF) finished the day 5 points, or 0.1%,
higher at 4,680.14.
Beyond oil concerns, some industry watchers have been fretting
about the markets rapid runup in stocks occurring so soon after
turbulence in October, which sent U.S. stocks tumbling.
Record levels on the S&P 500, however, are sparking a debate
among strategists, who have consistently expressed concerned about
the index's rapid recovery from the pullback last month. In just 12
sessions, the index, which fell nearly 10% on an intraday basis,
has bounced back from the bottom it hit on October 15. Low
volatility and bullish investor sentiment are among five red flags
that the stock market's record run is raising for some.
Nour Al-Hammoury, chief market strategist at ADS Securities,
said the U.S. market is "heavily overbought" and he expects another
short-term pullback in the next few days, especially without big
economic data. Support levels to watch over the near term on the
S&P 500, include 2,024, then 2,019, with a break of both
leading to the key psychological barrier of 2,000, he said.
For the Dow industrials, Al-Hammoury is watching for technical
support levels at 17,408 and then 17,350. "We still believe that
the current high could well be the last 'false' rally before the
major correction, similar to what happened after the end of QE1 and
QE2. Therefore, selling rallies remains our short term preferred
strategy," he said in a note. Read: Don't get suckered by stock
market's winning streak
Meanwhile, Michael Arone, chief investment strategist at SSGA's
US Intermediary Business Group, said that the underlying trends,
such as solid earnings and improving economy, have been driving the
market higher in the past few weeks.
"In this environment, PE ratios are likely to expand and drive
markets higher in the short-term. Falling oil prices along with
stronger dollar, low mortgage rates and solid job gains will result
in increased consumer spending. We will be watching Friday's retail
sales very closely to see if that is the case," Arone said.
Need to Know: Alibaba smacks of Twitter and how to ride the
closing ramp to profits
Economic data: The number of people who applied for unemployment
benefits last week posted the biggest increase in two months, but
initial claims are still exceedingly low amid an uptick in hiring
and relatively few layoffs.
Labor market data watched closely by the Federal Reserve - JOLTS
showed an increase in quit rates and hiring. Job openings fell in
September, but only because hiring hit its highest level in over
six years. Next on the data calendar is the October Federal budget
at 2 p.m. Eastern.
Earnings: Wal-Mart Stores Inc. shares rose (WMT) 4.7% after
third-quarter earnings and sales beat forecasts.
Kohl's Corp. fell (KSS) 3.2% after sales and earnings missed
forecasts for the third quarter. Nordstrom Inc. (JWN) will also
report. Read Movers & Shakers
Shares of J.C. Penney slid (JCP) 8.5% after third-quarter sales
missed already reduced expectations, though its loss was smaller
than expected.
Shares of Baker Hughes Inc. (BHI) soared 15% Thursday after The
Wall Street Journal reported that the company was in talks to be
acquired by peer oil-field services company Halliburton Co. (HAL) .
Halliburton's stock gained 1.1%.
Warren Buffett agreed to acquire the Duracell battery business
from Procter & Gamble Co. (PG) in a deal valued at $4.7
billion. Shares of Procter & Gamble closed 1% lower.
Cisco Systems Inc. (CSCO) rose 2.3% after the network-technology
company posted quarterly results that topped forecasts.
Viacom Inc. (VIA) rose 2.9% after reporting fiscal
fourth-quarter net profit of $732 million, or $1.72 a share,
compared with earnings of $804 million, or $1.68 a share, in the
year-earlier period.
Deal talk drove a 14% gain for shares of DreamWorks (DWA) after
The Wall Street Journal said toy maker Hasbro Inc. (HAS) is in
early talks to buy the animation studio, citing people familiar
with the matter. Hasbro shares fell 4.3%.
No letup for oil prices: Crude(CLZ4) continued to fall, down
nearly 3%, in the wake of comments by Saudi Arabia's oil minister
on Wednesday. Gold(GCZ4) made marginal gains, but was kept in check
by the dollar(USDJPY), which stayed well above Yen115. The yen also
fell as Japanese stocks extended a three-day winning streak, with
the Nikkei 225 hitting a seven-year high.
European stocks closed slightly higher. Read: European stocks
could be gearing up for a big rally.
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