Dow halts losing streak but market’s ‘slow bleed’ continues in tech sector
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Blue-chip stock indexes managed to avoid a seventh straight losing week, but barely -- and no thanks to the struggling technology sector.
The Dow Jones industrial average rose 42.84 points, or 0.4%, to close at 12,004.36 on Friday. That left the index also up 0.4% for the week, snapping a six-week losing streak that was the longest since 2002.
The Standard & Poor’s 500 index (charted below) also halted a six-week losing streak, but by a whisker. The S&P added just 3.86 points, or 0.3%, to 1,271.50 for the day and was up a mere 0.52 of a point for the week.
Stocks have been sliding worldwide since late April as the global economy has shown more signs of slowing, and as worries have deepened that Greece might default on its massive debt load, stoking another financial-system crisis that could spread beyond Europe.
Markets got a lift on Friday as Germany appeared to drop its insistence that Greece’s private bondholders share some of the pain of another euro-zone bailout of the Athens government. The European Central Bank and other euro-zone authorities have argued that forcing a debt restructuring on investors could be considered a default by Greece, potentially fueling a new credit crisis.
But late in the trading session the S&P 500 briefly went into the red for the day after Moody’s Investors Service put Italy’s bond ratings on review for possible downgrade -- a reminder that the continent’s debt woes extend beyond its smallest countries. Italy is Western Europe’s fourth-largest economy.
Still, the S&P index quickly recovered to close higher.
Although U.S. stocks have been having a dismal time for most of the last seven weeks, the overall damage to the market has been modest. “It has been a slow bleed,” said Ryan Larson, a trader at RBC Global Asset Management in Chicago.
Most major indexes hit multiyear highs on April 29. Since then, the Dow is down 6.3%, the S&P is off 6.8% and the Russell 2,000 small-stock index is down 9.6%.
Those declines are too small even to qualify as normal “corrections” in a bull market. A full-fledged correction is considered a drop of 10% to 20% in key indexes from their recent peaks.
Investors haven’t rushed to sell because most of the economic data suggest slowing growth but not a crash. And on Friday the Conference Board said its leading economic indicators rose 0.8% in May, well ahead of the 0.3% expected by analysts.
What’s more, falling oil prices are expected to help underpin consumer spending this summer. U.S. crude futures fell $1.94 to $93.01 a barrel Friday, the lowest since Feb. 18.
Still, continued declines in some former market darlings, particularly in the tech sector, have Wall Street on edge. Tech was the worst performer among 10 major S&P 500 industry sectors on Friday, falling 0.3%. The tech-heavy Nasdaq composite (charted at right) also was in the red for the day by 0.3%, and lost 1% for the week -- its fifth straight weekly decline. It’s down 8.9% since April 29.
Shares of Google Inc. sank below $500 on Friday for the first time since September. And Apple Inc. went negative for the year, losing $4.90 to $320.26. The stock has slumped 12% from its record high of $363 in February.
One glaring sign of the turnarond in sentiment toward tech: Online radio firm Pandora Media Inc.’s initial public stock offering this week turned into a bomb. The company went public at $16 on Tuesday, rallied as high as $26 on Wednesday, then crashed on Thursday. The stock ended Friday at $13.40, up 14 cents after trading as low as $12.16.
-- Tom Petruno
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