Stocks rose, dropped and then recovered Friday as Wall Street showed nervousness about rising inflation and dollar weakness but took solace from resilient consumer spending and steady economic growth.
NEW YORK (AP) — Stocks rose, dropped and then recovered Friday—just as they did over the course of the first quarter, as Wall Street showed nervousness about rising inflation and dollar weakness but took solace from resilient consumer spending and slow but steady economic growth.
The Dow Jones industrials finished the last trading day of the quarter 5 points higher. The blue chip index ended the quarter down about 108 points, or 0.9 percent, the most feeble performance since the second quarter of 2005.
Stocks had initially climbed Friday after data showed a rise in consumer spending and growth in Chicago-area manufacturing. But in late morning trading, they reversed course when the Bush administration detailed economic sanctions against China to protect American paper producers from what it called unfair Chinese government subsidies. The news caused the dollar to weaken, raising concerns in the market about the U.S. currency’s status as an investment vehicle – one of the factors behind the market’s big drop in late February.
Also causing wariness among investors, the Commerce Department reported that core inflation rose in February at the fastest rate since August.
But investors, shoring up their portfolios as the first quarter ended and picking up bargain stocks, managed to pull the market up from its lows of the day.
“It’s been kind of a rough quarter. There have been some shocks out there. And the retail investor has been taking it in stride,” said Scott Merritt, U.S. equity strategist at JPMorgan Asset Management.
According to preliminary calculations, the Dow Jones industrial average rose 5.60 points, or 0.05 percent, to 12,354.35, after rising by as much as 67 points and then falling by 106 earlier in the day.
Broader stock indicators were mixed. The Standard & Poor’s 500 index lost 1.69, or 0.12 percent, to 1,420.84, while the Nasdaq composite index rose 3.76, or 0.16 percent, to 2,421.64.
Bonds slipped, with the yield on the benchmark 10-year Treasury note rising to 4.65 percent from 4.64 percent late Thursday. Gold prices rose.
The dollar fell against other major currencies after news of the sanctions against China – notably the yen, which many investors borrow with to buy higher-yielding dollar assets. If the dollar weakens too much, dollar assets will become less attractive, a problem for the stock market.