US stocks drift in a quiet close to another winning week

Stan Choe and Alex Veiga
Associated Press
Trader Frank O'Connell on the floor of the New York Stock Exchange, Friday, Jan. 11, 2019.

New York – U.S. stock indexes nestled a hair lower on Friday after the falling price of oil weighed on energy companies, but the S&P 500 nevertheless closed out its third straight winning week following a brutal stretch in December.

It was a day full of broken streaks – oil fell for the first time in two weeks, and the yield on the 10-year Treasury note sank to its first loss in more than a week – but the market remained calm through it. Gradual moves for markets in recent days have offered a respite following the tumultuous trading that rocked investors in late 2018.

“After some of the initial gains we saw earlier in the week I think it’s just a rally looking tired,” said Willie Delwiche, investment strategist at Baird. “I think it’s probably not much more than a chance for people to digest the move and try to get a sense of whether we’ve had a bounce – and this is it – or maybe a pause as we continue to move higher.”

The S&P 500 edged down by 0.38 points, or less than 0.1 percent, to 2,596.26. Last month, a typical day for the index was a swing 10 times that.

The Dow Jones Industrial Average dipped 5.97 points, or less than 0.1 percent, to 23,995.95. The Nasdaq composite lost 14.59, or 0.2 percent, to 6,971.48, and the Russell 2000 index of smaller stocks ticked up by 1.95, or 0.1 percent, to 1,447.38.

It was the first loss for the S&P 500 in six days, and much of the reason for it was the falling price of oil. Benchmark U.S. crude lost 1.9 percent to settle at $51.59 per barrel, and Brent crude, the international standard, sank 1.9 percent to $60.48 a barrel.

That helped pull energy stock in the S&P 500 down 0.6 percent, the largest loss among the 11 sectors that make up the index. ConocoPhillips, Marathon Oil and Hess all fell more than 1 percent.

Big gains earlier in the week meant the S&P 500 was still hanging onto a 2.5 percent rise for the last five days. The three-week winning streak for the S&P 500 is its longest since August. Not only that, the last three weeks of gains have all been of more than 1.8 percent. The last time that happened was in 2001.

The S&P 500 has been clawing back gains since running to the edge of what traders call a “bear market,” when it dropped 19.8 percent between setting a record in September and a low on Christmas Eve. Stocks have climbed on soothing words from the Federal Reserve about the future path of interest rates, plus hopes that the U.S.-China trade dispute may ease. That’s helped to at least paper over worries about slowing growth for corporate earnings and the possibility of a looming recession.

Companies across the country are gearing up to report how much profit they made in the last three months of 2018, and expectations are for a fifth straight quarter of growth topping 10 percent.

General Motors gave an encouraging sign Friday when it gave better-than-expected profit forecasts for both 2018 and 2019. That helped the automaker surge to the biggest gain in the S&P 500, and it jumped $2.45, or 7.1 percent, to $37.18.

Other big-name companies have recently offered a more discouraging picture of revenue trends due to slowing growth in China and elsewhere.

That’s why analysts say this upcoming earnings reporting season, which kicks off in earnest next week, could be the next trigger for volatility in the market. Delwiche said he wants to hear how optimistic CEOs are given all the uncertainties about the economy.

“We’ve seen some retrenchment in business confidence,” Delwiche said. “Is it a blip or evidence that those animal spirits that we saw are starting to dissipate?”

In overseas markets, Japan’s Nikkei 225 index jumped 1 percent, the Kospi in South Korea rose 0.6 percent and the Hang Seng in Hong Kong gained 0.5 percent. In Europe, France’s CAC 40 dropped 0.5 percent, and Germany’s DAX lost 0.3 percent. The FTSE 100 in London fell 0.4 percent.

The yield on the 10-year Treasury note fell to 2.69 percent from 2.73 percent late Thursday.

In the commodities markets, gold rose 0.2 percent to $1,289.50 per ounce, silver edged up 0.1 percent to $15.66 per ounce and copper rose 0.9 percent to $2.66 per pound.

Natural gas gained 4.4 percent to $3.10 per 1,000 cubic feet. Heating oil lost 1.4 percent to $1.88 per gallon, and wholesale gasoline slipped 2.1 percent to $1.40 per gallon.

The dollar rose to 108.50 Japanese yen from 108.42 yen late Thursday. The euro slipped to $1.1465 from $1.1500, and the British pound rose to $1.2845 from $1.2746.