Wall St flat as investors chase commodity stocks
Higher commodity prices drove a bid for materials and energy stocks in an otherwise lackluster session on Friday, ahead of the start of the corporate earnings season, seen as the next catalyst to drive stocks higher.
Stocks have traded in a tight range, running into resistance at elevated levels this week. Volume has been low as investors hold off making big bets before companies report their quarterly results.
A fall in the dollar, pressured by expectations of more rate hikes in the euro zone, as well as hopes for strong demand, helped lift oil and metal prices.
Chevron Corp
The weaker dollar has given an impetus for pushing deep into the commodities, said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. Krosby said the sector was seeing extra gains from speculation.
The Dow Jones industrial average <.DJI> dropped 5.14 points, or 0.04 percent, to 12,404.35. The Standard & Poor's 500 Index <.SPX> fell 0.15 points, or 0.01 percent, to 1,333.36. The Nasdaq Composite Index <.IXIC> lost 1.77 points, or 0.06 percent, to 2,794.37.
The earnings season will begin unofficially with Alcoa Inc
Volumes recently have been among the lowest of the year as investors wait to see how corporations are faring in an environment with overseas headwinds but also signs of economic recovery.
Bullishness has risen to levels not seen since last December ahead of earnings, according to a survey by Investors Intelligence, but Prudential's Krosby says results are not a done deal and corporate outlooks will be key given the rising cost of raw materials.
There is a gnawing sense that perhaps the U.S. economy may be losing some of the momentum that we saw in the first quarter, she said. What you want to hear is whether or not these companies can pass along these costs.
The S&P is nearing resistance around 1,345, near its 2011 high, and many analysts believe earnings could be the catalyst that pushes the market through that.
Most people are very bullish and focused on earnings season, which should see solid growth, especially in financials, technology and commodities, said Paul Brigandi, vice president of trading at Direxion Funds in New York.
Brent crude climbed to a 32-month high and was at $125.90 a barrel on concerns of long-term supply cuts in Libya. Occidental Petroleum Corp
Copper rose 2.1 percent while gold hit record highs on Friday and silver reached its strongest level since early 1980. U.S.-listed shares of miner Rio Tinto Plc
The euro rose to a 15-month high against the dollar. The prospect of a U.S. government shutdown helped pushed the dollar lower as well as expectations of rising interest rates in Europe.
The White House and Congress faced a midnight deadline to break a budget deadlock. Democratic and Republican leaders said there was still no overall deal on government funding for the rest of the fiscal year. When will the White House and when will Senate Democrats get serious about cutting spending? House Speaker John Boehner, a Republican, said on Friday.
Shares of Seagate Technology Plc
(Editing by Leslie Adler)
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