MARKET REPORT

Trading light, stock indexes dip

— U.S. stocks drifted lower in light trading Monday, pulling the Standard & Poor’s 500 index back from a five-year high.

The broad-market index edged up slightly last week, enough to put it at its highest level since November 2007. With little in the way of market-moving news Monday, the S&P 500 slipped 0.92 of a point to close at 1,517.01.

Seven of the 10 industry groups within the S&P 500 dropped.

With major indexes near record highs, many think the stock market’s six-week rally is ready for a pause.

“The consensus seems to be that we’re due for a correction,” said Brian Gendreau, market strategist at Cetera Financial Group. “If you compound the increase we’ve had so far, this year would be the best year ever for stocks. And nobody thinks that that’s going to happen.”

The best year ever for stocks? For the S&P 500 index it was 1933, when the index rebounded 46 percent in the middle of the Great Depression.

In other trading Monday, the Dow Jones industrial average dropped 21.73 points to 13,971.24. United Health Group led the Dow lower, losing 62 cents to $57.12.

The Nasdaq composite fell 1.87 points to 3,192.00.

Fewer than three stocks fell for every two that rose on the New York Stock Exchange. Consolidated volume was a light 2.7 billion shares versus the recent average of 3.5 billion.

Solid earnings reports have helped feed the rally in recent weeks.

Of the 342 companies in the S&P index that reported results through last week, two out of every three have beat Wall Street’s earnings estimates, according to research from Goldman Sachs.

Gendreau pointed to three reasons he believes that stocks still have room to run. Even after the market’s recent surge, the typical stock looks fairly priced when compared with underlying earnings.

Corporations keep finding ways to increase profits, which helps drive stock prices higher. And Americans looking for places to put their savings have few attractive alternatives.

“I’ll go out on a limb and say that I think earnings growth, attractive valuations and pent-up demand will add up to a fairly strong year for equities,” Gendreau said.

Apple’s stock gained after reports over the weekend that the tech giant is developing a wristwatch-like gadget, a smart watch. The device would reportedly run the same operating system used for iPhones and iPads. Apple shares rose $4.95 to close at $479.93.

In the market for U.S. government bonds, the yield on the 10-year Treasury hovered at 1.95 percent on Monday, unchanged from late Friday. The yield began the year trading at 1.70 and has moved steadily higher as worries about a recession have dissipated, drawing traders out of the Treasury market, the world’s biggest hiding spot.

Business, Pages 24 on 02/12/2013

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