U.S. Stocks on Track to Snap Two-Week Losing Streak
May 26 2017 - 1:30PM
Dow Jones News
By Riva Gold and Corrie Driebusch
U.S. stocks were little changed Friday, though major indexes
were on track to snap a two-week losing streak.
Stocks have risen for six straight sessions, supported by
stronger-than-expected first-quarter earnings, expectations for the
Federal Reserve to move only gradually and continued signs of a
steady economy.
On Thursday, the S&P 500 notched its 19th record closing
high of the year, surpassing the 18 records reached in 2016. It's
set to close the week up 1.4%, its biggest weekly gain in nearly a
month.
"We've had a strong start to the year, but the question is, is
this the calm before the storm?" said Allen Bond, portfolio manager
of the Jensen Quality Growth Fund, which manages just over $5
billion.
While the market is looking expensive and there may be better
opportunities overseas, low volatility and high investor confidence
suggest there might be a bit further for the market to climb, some
analysts and fund managers said.
Mr. Bond said he believes recent data points to healthy if not
robust economic growth, and that, along with solid earnings, makes
him optimistic about where stocks are headed. However, he's made
sure his portfolio is well-positioned for any stock-market selloff
by buying companies that he believes have meaningful competitive
advantages.
On Friday, the Dow Jones Industrial Average edged up 0.5 points,
or less than 0.1%, to 21084. The S&P 500 and the Nasdaq
Composite rose less than 0.1%.
Leading the gains this week are an unlikely combination: shares
of utilities companies and technology firms. Both sectors in the
S&P 500 were up more than 2% in the past week.
Tech shares are up more than 20% so far this year, as investors
have scooped up companies that have outperformed the broader market
in the eight years since the financial crisis.
Amazon.com, though classified in the S&P 500 as a consumer
company, has risen among big tech names, and its stock traded on
Friday within a few dollars of $1,000. Its price has soared from
around $68 apiece a decade ago, a sign not only of the company's
growth but also how fewer companies are choosing to "split" their
stocks to boost the number of shares and lower prices.
Utilities companies, often referred to as bond proxies thanks to
their steady dividend payments, also have climbed as inflation
expectations under President Donald Trump have moderated.
Separately, energy shares were the biggest losers over the past
week, as the price of oil dropped. U.S.-traded crude oil recently
climbed 1.4% to $49.58 a barrel, but is still on track to end the
week down more than 2%.
Oil prices declined earlier this week on disappointment that the
Organization of the Petroleum Exporting Countries didn't take more
aggressive measures to cut production at a meeting in Vienna.
Although OPEC members agreed to extend production cuts through
March 2018, "the market had been speculating in deeper cuts and a
longer commitment," said Martin Enlund, analyst at Nordea.
Energy stocks in the S&P 500 are on pace to close 2.2% lower
on the week.
In currencies, the WSJ Dollar Index edged down 0.1%, deepening
this month's losses. The dollar fell 0.7% against the yen, which
tends to benefit in times of market stress.
The Stoxx Europe 600 declined 0.2%.
Australia's S&P/ASX 200 shed 0.7% amid broad weakness in
commodities-focused companies, while Japan's Nikkei was off 0.6% as
a stronger yen also weighed on Japanese stocks. Both bourses ended
the week with gains.
South Korea's Kospi Composite Index and India's Sensex hit
record highs.
Write to Riva Gold at riva.gold@wsj.com and Corrie Driebusch at
corrie.driebusch@wsj.com
(END) Dow Jones Newswires
May 26, 2017 13:15 ET (17:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.