NEW YORK — The Dow Jones industrial average rose as much as 50 points Friday before falling into the red in the last half-hour of trading.
It was just the fourth day in September that the Dow hasn’t managed a gain.
Still, the declines were small. The Dow lost 17.46 points, or 0.1 percent, to 13,579.47. The Standard & Poor’s 500 fell in the final minutes of trading, closing down a minuscule 0.11 point, or 0.01 percent, to 1,460.15.
The other main index, the Nasdaq composite, rose 4 points, or 0.1 percent, to 3,179.96.
Consolidated volume on the New York Stock Exchange was an average 4.53 billion shares.
Despite the Friday blip, stocks are still much higher than might be expected for such a slow economy. This month, the Dow and the S&P started trading at levels not seen since December 2007, nine months before the fall of Lehman Brothers investment bank.
Since the start of June, the Dow has popped nearly 1,200 points.
But the stock market’s party mode doesn’t mean the underlying economy is healed - far from it. The summer rally is mostly the result of vows by the Federal Reserve and other central banks, like the Bank of Japan and the European Central Bank, to do more to try to help.
The promises also are an unsettling reminder: The central banks think the economy is so bad that it can’t bounce back on its own.
“It’s just a big illusion,” said Bob Phillips, managing partner at Spectrum Management Group in Indianapolis. The economy, he said, is still a “no man’s land” plagued by high unemployment and slow gro1wth.
The signs were obvious Friday: The Labor Department reported that the unemployment rate rose in 26 states last month. The World Trade Organization cut its estimates for growth in global trade for this year and next.
In Europe, Spain was reportedly close to asking for a bailout from Europe.
It’s all a reminder that there’s only so much the Fed can do. It can’t fix the fiscal cliff facing the U.S. government, the higher taxes and government spending cuts that take effect next year unless Congress acts.
Phillips said he’s worried about “a nasty correction at the first hint of any less-than-stellar news.”
Timothy Leach, chief investment officer for U.S. Bank wealth management in San Francisco, said central banks are buying time more than fixing underlying problems.
“But at least they’re taking some of the pressure off,” Leach added, “allowing policymakers some additional time to try to achieve those real solutions.”
The price of gold briefly hit a high for 2012 on the news that Spain might get extra bailout funds. Such rescue packages can often cause inflation, and many investors buy gold as a hedge against inflation
Homebuilder KB Home swung to a quarterly profit by selling pricier homes. KB Home’s stock jumped $2.15, or more than 16 percent, to $15.26.
Business, Pages 32 on 09/22/2012