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Dow Snaps Streak, S&P Cowers From Record High

NEW YORK ( TheStreet) -- The S&P 500 failed to reach a record closing high on Friday as investors retreated from equities on a plunge in consumer confidence. Markets will look ahead to next Wednesday when the Federal Reserve's policy-making wing makes its latest announcement, followed by Chairman Ben Bernanke's press conference.

The Dow Jones Industrial Average fell 25.03 points, or 0.17%, to 14,514.11 and snapped a 10-day winning streak, which marked the blue-chip index's longest since November 1996. The Dow gained 0.81% for the week.

The S&P 500 lost 0.16% to 1,560.70 as the index posted a five-day 0.61% increase. The Nasdaq was behind by 0.3% at 3,249.07, and rose 0.14% for the week.

DirecTV (DTV) on Friday closed as one of the top advancers on the S&P, as shares popped 4.5% to $54.99 after the largest U.S. satellite TV provider, according to a Reuters report, dropped its bid for GVT, the Brazilian unit of European media and telecommunications giant Vivendi. After failing to attract its target €7 billion ($9 billion) in bids, Vivendi is putting the sale on hold, with only a KKR-led consortium of private equity groups left as a bidder, Reuters reported.

A preliminary estimate on the Thomson Reuters/University of Michigan Consumer Sentiment Index showed a decline to 71.8 in March, the lowest since December 2011, from 77.6 in February. Economists were expecting an improvement to 78.

"It looks like the dip in the preliminary reading of consumer confidence will foil the market's record run, at least until we can understand what is driving consumers' sudden downturn in forward-looking confidence," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, said in an investor note.

Industrial output did gain 0.7% in February after an upwardly-revised unchanged level in January, the Federal Reserve said, reinforcing evidence of improved economic activity. Production was forecast to rise 0.4%.

Factory usage, known as the capacity utilization rate, rose to 79.6% in February, the highest level since March 2008. The final reading was higher than the upwardly-revised 79.2% in January and the consensus estimate of 79.3%, the Fed said.

"We've stretched the American worker to get out just about as much as we can," Keith Bliss, senior vice-president at the New York-based brokerage Cuttone & Co. told TheStreet during an interview Tuesday at the New York Stock Exchange.

When that happens, companies either need to hire more workers or pay existing workers more money to work longer hours, Bliss added. "Both of those effects have wage inflation impact, and we could start to see more inflation inside the broader economy which then may force the Fed's hand," he said.

Although many market participants are convinced the rally has extended too far and too fast, Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati said most of the one-week, one-month and two-month average returns over the past 14 instances in which the Dow has posted winning streaks of at least 10 days have been positive.

"Past examples of big winning streaks actually show more strength could be in the cards," said Detrick.

Bank stocks were in focus Friday after the Federal Reserve on Thursday approved the plans of 14 of the largest U.S. banks to divert money to shareholders after they were submitted to a battery of annual capitalization tests.

Bank of America (BAC - Get Report) was among those that received approval. Bank of America said it will repurchase up to $5 billion of common stock and redeem about $5.5 billion in preferred shares. The stock jumped 3.8% to $12.57.

Houston, Texas-based utility holding company CenterPoint Energy (CNP - Get Report) and Oklahoma City, Okla.-headquartered energy provider OGE Energy Corp. (OGE - Get Report) charged to a record high Friday of $67.88 a share after they announced a master limited partnership deal with ArcLight Capital Partners, a Boston, Mass.-based energy-focused investment firm with more than $10 billion under management. The partnership creates a U.S. midstream company with combined assets of nearly $11 billion.

CenterPoint popped 7.2% to $23.41 and OGE closed higher by 10.2% to $67.63 a share.

The benchmark 10-year Treasury was rising 11/32, diluting the yield to 1.997%. The dollar was sinking 0.44%, according to the U.S. dollar index .

April crude oil futures rose 42 cents to settle at $93.45 a barrel.

The "quadruple witching" of futures and options contracts took place Friday at the open and also occured at the closing bell depending on the type of contract. The S&P 500's quarterly rebalancing also took place at the close. Both activities were expected to bring much bigger volume and some added volatility to the markets.

Schaeffer's Investment Research said that S&P 500 returns since 2000 have on average been lower on the Mondays after "quadruple witching" day.

Volumes totaled a hefty 5.01 billion shares on the New York Stock Exchange and 2.27 billion shares on the Nasdaq.

Written by Andrea Tse and Joe Deaux in New York

>To contact the writer of this article, click here: Andrea Tse.

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DTV $0.00 0.00%
BAC $17.47 0.00%
CNP $17.06 0.35%
OGE $25.78 -0.50%
AAPL $118.88 0.96%


Chart of I:DJI
DOW 17,812.19 +19.51 0.11%
S&P 500 2,089.14 +2.55 0.12%
NASDAQ 5,102.8080 +0.33 0.01%

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