S&P Ends Seven-Day Winning Streak as Markets Exhale
NEW YORK ( TheStreet) -- Major U.S. stock averages finished mixed Tuesday as investor enthusiasm ebbed following more than a week of record gains.
The Dow Jones Industrial Average managed to eek out an eighth-consecutive winning session and a sixth-straight record closing high while the S&P 500 snapped its 7-day rally.
The relative pause in the markets' trajectories followed an historic rally punctuated by the S&P's seven-day winning streak that pushed the gauge to its highest level in more than five years. It was the longest streak since the seven-day period ended March 15, 2012, and catapulted markets above levels reach prior to the recession. The Dow, similarly, posted its fifth-straight record close.Mark Newton, the New York-based technical analyst at Greywolf Equity Partners in a report published yesterday, suggested traders may be better off tackling the recent run-up by shorting the S&P 500. "We've reached a time when upside should prove difficult to come by after eight of the last 10 trading days of positive gains, and quite a few time relationships to former highs and lows over the last year and last 100 years are now present which historically have proven important," Newton explained. Costco Wholesale (COST - Get Report), the warehouse retailer, rose 1.3% to $103.75 on Tuesday after posting fiscal second-quarter earnings of $547 million, or $1.24 share, up from year-earlier earnings of $394 million, or 90 cents a share. Yum! Brands (YUM) gained 1.3% to $68.73 after reporting a decline of 20% in its same-store sales in China for January and February, better than the company's forecast of a 25% drop. Apple (AAPL - Get Report) shares slid 2.2% to $428.43 after Jefferies slashed its price target on the tech giant to $420 from $500. Blue-chip laggards Tuesday included Caterpillar (CAT), Bank of America (BAC), Walt Disney (DIS) and Pfizer (PFE). Merck (MRK), Hewlett-Packard (HPQ) and Boeing (BA) were among some stocks that were advancing. Sectors were mostly in the red in the broader market. Consumer cyclicals, conglomerates, technology and financials topped the decliners while only basic material and healthcare sector stocks traded higher. Jeffrey Sica, president and chief investment officer at SICA Wealth Management, which oversees more than $1 billion, is cautious about the improvement in headline economic numbers and urges investors to look deeper into the reports. Sica said that while Friday's unemployment data was better than expected, the number of people all but dropping out of the workforce rises. Fewer people actively looking for a job could ironically bring the jobless rate to near the Federal Reserve's 6.5% unemployment target, and therefore convince Chairman Ben Bernanke to phase out the bank's quantitative easing. In such a scenario, Sica forecats that the economy will contract and the decreasing quality of jobs will continue to erode the income and savings of most Americans. The trends, Sica writes, "will force the Fed to restart easing or admit the reality that QE is almost entirely ineffective in stimulating the economy in a meaningful way, long term." Sica said that right now he would continue to take profits and refrain from putting any new money to work in the stock market. Sica recommends putting money into cash or short-term Treasuries, precious metals, short-term high-yield corporate bonds, Treasury inflation protected securities, real estate and agriculturals. In Washington, House Republicans on Tuesday presented a strategy to reduce spending by $4.6 trillion over the next decade. The proposal includes working towards balancing the U.S. budget without resorting to tax hikes by eradicating President Barack Obama's healthcare law, overhauling Medicare, and reducing the number of tax brackets for individuals to two: 10% and 25%. Across-the-board spending cuts took effect on March 1 after legislators were unable to reach a deal to avert the "sequestration." Jan Hatzius, the chief U.S. economist at Goldman Sachs, said that though funding was cut March 1, most of the cuts won't take effect until April or, in some cases, even later. Volumes totaled 3.22 billion shares on the New York Stock Exchange and 1.67 billion shares on the Nasdaq. Gold for April delivery closed up $13.70 to $1,591.70 an ounce at the Comex division of the New York Mercantile Exchange, while April crude oil futures rose 48 cents to $92.54 a barrel. The benchmark 10-year Treasury was rising 12/32, diluting the yield to 2.02%. The dollar was off 0.07%, according to the
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