For The Seventh Straight Week…
Stocks drifted lower Friday on very light pre-holiday volume despite yet
another round of economic reports that suggest the Federal Reserve rate cuts
will likely continue. By the close, the Dow had given up 1.0%, the Nasdaq lost
1.4%, and the S&P 500 sank 1.2%.
Volume dried up as market participants headed out early for the holiday.
Nasdaq volume was a scant 1.35 billion while NYSE volume was a light 809 million
shares.
In economic news, April’s existing home sales came in at a rate of 5.20
million, which was slightly below the expected 5.25 million.
In addition, consumer sentiment for May eased to 92.0, which was below the
anticipated 92.3. Both figures reinforce the general consensus that the Fed rate
cut parade will continue.
One analyst commented that the money that continues to flow back into stock
mutual funds bodes well for the market in the near term.
“We saw the seventh consecutive week of Equity Fund Inflows, and we saw
strong inflows return to Technology Funds. This action added credibility to the
broader stock market’s recovery,” said Brian Belski, Fundamental Market
Strategist, U.S. Bancorp/Piper Jaffray.
“We believe the strong rebound in overall Equity Fund inflows coupled with
Money Market Inflows that approached $18 billion for the second week in a row
provides credible evidence that investors are putting investable dollars to work
again,” he added.
According to preliminary numbers, the Dow lost 117.05 to 11,005.37, the
Nasdaq slipped 30.96 to 2251.06, and the S&P 500 eased 15.27 to 1277.90.
Top sectors were gold and silver
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up 1.4%, and airlines
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On the downside were retailers
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down 1.4%, and Internets
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Alternative energy companies fared well as Plug Power
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and Fuel Cell
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Avoiding the downdraft in tech was Dell Computer
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to 27.00 and ended back above its 200-day moving average.
Dow winners were Alcoa
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Philip Morris
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Dow dogs were Wal-Mart
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American Express
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Looking ahead past the Memorial Day holiday weekend, earnings warning season
kicks off next week, and analysts have already commented that they expect a few
weak showings among the techs.