After a seven-day rally that produced consecutive record highs for the Dow Jones Industrial Average, the stock market today (Tuesday) took a breather.
In early afternoon trading, the Dow Jones Industrial Average was down 16.66 or .12% at 14,430.63. The Standard & Poor’s 500 Index was off 4.94, or .32% at 1,551.37. The Nasdaq was lower by 16.30, or .50% at 3,236.
“We’ve just been going up and up and up every day, and now a slight pullback. There is nothing surprising here, by any stretch of the imagination-it’s natural to get a little pullback like this,” Sean Kelly, managing director at Knight Capital told The Wall Street Journal.
Market participants continue to closely watch the S&P 500 Index. The broad-based market benchmark is close to its all-time closing high of 1,565.15 hit on Oct. 9, 2007.
But investors may be getting a bit concerned about the recent bull run. After falling to a six-year low on Monday, the VIX (the market’s fear index), rose 7.8% Tuesday.
Also, the current bull market is aging. It turned 4 on Saturday. Only five of the past 11 bull markets have made it to their fifth birthday, according to data from S&P Capital. The average bull market since 1932 has endured for roughly four-and-a-half years.
Not helping stocks Tuesday was a read from the National Federation of Independent Business. While the report showed its small business optimism index rose in February, exceeding expectations, the federation’s reading on expected business conditions remained in deep recession territory. Moreover, business owners reporting declining sales far surpassed those reporting increased sales.
Takeover Rumors Make Waves in Stock Market Today
BlackBerry maker Research in Motion Ltd. (Nasdaq: BBRY) gave back 3.88% after shares rang up a 14% gain (the biggest in a month) Monday. Rousting shares were rumors Hong Kong’s Lenovo Group Ltd. (LNVGY) was interested in acquiring the smartphone maker.
A spokesperson for Lenovo squashed the chatter, but Lenovo’s CEO Yang Yuanqing reportedly offered these optimistic words to Paris-based financial newspaper Les Echos.
A deal “could possibly make sense, but first I need to analyze [the] market and understand what exactly the importance of this company is,” said Yuanqing.
BlackBerry found some support from news that AT&T (NYSE: T) started taking orders for the souped-up BB10 ahead of its U.S. March 22 launch. Verizon Communications Inc. (NYSE: VZ) and T-Mobile retailers will also sell the device.
Shares of social game maker Zynga Inc. (Nasdaq: ZNGA) rose Monday after a Bloomberg News article said the struggling company would make a good fit and potential takeover for Internet giant Yahoo! Inc. (Nasdaq: YHOO).
Shares jumped 10% Monday on the suggestion Zynga may be in play. Shares rose 5% in pre-market trading Tuesday, but then fell 4% after no word came from Yahoo.
Dell Inc. (Nasdaq: DELL) shares were little changed a day after the personal computer maker agreed to open its books up to activist investor Carl Icahn. The billionaire trader, in opposition of the $24.4 billion deal to take the company private, had been pushing for a $9 per share special dividend. He also says the company is worth more than the proposed $13.65 bid.
Financial stocks were lower Tuesday. March’s best performers to-date, buoyed after 17 of the 18 nation’s biggest banks passed the Fed’s latest “stress test,” lost some momentum amid concerns the Fed’s test was too easy and opaque.
A passing grade paves the way for banks to raise dividends and buyback shares. But the Fed cautioned the results don’t indicate a clear “pass” or “fail” since they don’t incorporate the latest dividend and share buyback plans.
Bank of America Corp (NYSE: BAC) lost nearly 1%, Citigroup Inc. (NYSE: C) slumped 2% and Morgan Stanley (NYSE: MS) dipped 1.65%, Goldman Sachs Group Inc. (NYSE: GS) fell 1.06%,, and Wells Fargo & Co (NYSE: WFC) slipped 0.75%.
Stock losses were gold’s gains. The risk-off trade, heavy short covering, bargain shopping, and safe haven hunting pushed the yellow metal higher by $18 to $1,596.00 an ounce, a two-week high.
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