Bulls Run for 5 Days then Rest
Friday the equity markets cooled their jets after the Dow, S&P and Nasdaq hit 2009 highs. Falling oil prices dragged on the influential commodities sector and investors took a step back after pushing the major indexes to 11-month highs in the previous session.
Via CNNMoney.com -- The Dow Jones industrial average (INDU) lost 21 points, or 0.2%. The S&P 500 (SPX) index lost 1 point, or 0.1%. Both the Dow and S&P 500 ended the previous session at their highest points since Oct. 6.
The Nasdaq composite (COMP) fell 3 points, or 0.2%, after ending the previous session at its highest point since Sept. 26.
The three major indexes rose for the week.
Stocks managed slim gains through midday as investors welcomed FedEx's upbeat profit forecast and a jump in consumer sentiment, but the gains were shaky on the heels of a five-session advance.
On Thursday, stocks rallied as a well-received debt auction and Procter & Gamble's improved forecast added to recovery hopes.
The weak dollar, higher commodity prices and investor fears of missing out on a rally have all contributed to the rally's most recent leg. However, this week's advance has been fueled by light trading volume, suggesting investors are reluctant to commit.
Investors have also been pulling money out of stocks and funds and putting it into cash or bonds. Tracker Trim Tabs said equity mutual funds and ETFs are on track to post the first monthly outflows since March.
Since bottoming March 9 at a more than 12-year low, the S&P 500 has risen 54% as investors have gone from pricing in a depression to a recession to a recovery.
The pace of the advance, combined with the seasonal tendency for September and October to be weak for stocks, led many to predict a fall selloff. But that hasn't happened and doesn't seem to be brewing as of yet.
The CBOE Volatility index, the VIX, Wall Street's fear gauge, closed Friday at the lowest point since Sept. 8 of last year. Typically, the VIX moves inversely to the direction of stocks.
Tuesday marks the first anniversary of the collapse of Lehman Brothers, an event seen as exacerbating the recession and pushing the economy into crisis mode.
Ahead of that, President Obama will speak Monday about the steps his administration has taken to "bring the economy back from the brink" and make sure a collapse at that level doesn't happen again.