Stocks close flat on low volume

Saturday, December 28, 2013

NEW YORK - Wall Street’s six-day rally stalled Friday as stocks ended the day mostly flat in quiet trading.

The Dow Jones industrial average closed down 1.47 points, or 0.01 percent, to 16,478.41.

The Standard & Poor’s 500 index fell 0.62 point, or 0.03 percent, to 1,841.40, and the Nasdaq composite was down 10.59 points, or 0.3 percent, at 4,156.59.

Bond yields continued to rise. The yield on the 10-year Treasury note climbed above the 3 percent mark. The yield hasn’t consistently traded above that level since July 2011. The increase will translate into higher interest rates on mortgages and other kinds of loans.

Energy stocks were among the biggest gainers after oil prices climbed above $100 a barrel for the first time since October. Offshore oil drilling companies Transocean and Diamond Offshore each rose about 1.5 percent. Oil giant Exxon Mobil climbed 1 percent.

Sprint jumped 83 cents, or 8 percent, to $10.79 after news reports that Japan’s Softbank, which owns Sprint, may use the company as a vehicle to purchase wireless competitor T-Mobile.

Many Wall Street workers remain on vacation. Trading volume has been very low this week. Only 2 billion shares changed hands on the New York Stock Exchange on Friday, about 40 percent below the recent average.

There were no major economic reports or corporate earnings reports Friday.

Even with Friday’s pause, the stock market has been in rally mode heading into the end of the year. The Dow and S&P 500 are up 2.4 percent and 2 percent respectively so far in December, with only two trading days left in the year. For 2013, the S&P 500 is up roughly 29 percent, its best year since 1997, and the Dow is up 25.8 percent, its best year since 1996.

In the bond market, the yield on the 10-year Treasury note rose to 3 percent from 2.99 percent Thursday.

Bond yields have steadily climbed since Dec. 18, when the Federal Reserve announced it was paring back its bond-buying program. The purchases were aimed at keeping long-term interest rates low to encourage borrowing and hiring.

“Interest rates are on a road back to normalcy after being artificially suppressed by the Fed,” said Karyn Cavanaugh,market strategist with ING U.S. Investment Management. Cavanaugh said she expects the yield on the 10-year note to rise to about 3.5 percent by the end of 2014.

General Motors was among the bigger movers Friday, its shares falling 58 cents, or 1 percent, to close at $40.94. The automotive giant said it would have to recall 1.5 million cars in China to replace a bracket that secures a fuel pump.

Twitter shares fell $9.56, or 13 percent, to $63.75. Twitter has soared in recent days, prompting Wall Street analyst Macquarie Capital to downgrade the company’s stock to the equivalent of “sell,” saying the rally was overdone. Even with Friday’s sell-off, the social media company’s stock is still up 53 percent this month.

The shares have jumped 40 percent since Macquarie initiated coverage on Dec. 11, without any improvement in Twitter’s fundamentals, Macquarie analyst Ben Schachter said in a report.

“We continue to believe that Twitter as a company has a bright future and many opportunities ahead,” he said. “However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation.” Information for this article was contributed by Mick Turner of Bloomberg News.

Business, Pages 32 on 12/28/2013