US stocks slip after weaker growth
February proved to be a strong month for US stocks, even though it ended in downbeat fashion.
Major stock indexes closed lower, capping a week of subdued trading that still delivered a couple of new highs for the Dow Jones industrial average and Standard & Poor's 500 index. It also brought the Nasdaq composite within striking distance of its March 2000 high.
The Nasdaq notched the biggest monthly gain at 7.1%. But the S&P 500's 5.5% performance marked its best monthly increase since October 2011, and a turnaround from its 3.1% slide in January. The Dow rose 5.6% for the month.
Trading was listless for much of Friday as investors balanced encouraging reports on housing and consumer confidence against data showing that the US economy grew at a slower annual rate in the final months of 2014 than previously estimated. Oil rose, recouping some of its losses from a day earlier. Technology stocks were among the biggest decliners.
"Many people are trying to figure out what to do, taking some profits when they can. We saw that over the past couple of days with tech stocks," said JJ Kinahan, TD Ameritrade's chief strategist. "It's a wait-and-see attitude."
The Dow ended down 81.72 points, or 0.5%, to 18,132.70. That is 0.5% below its most recent high of 18,224.57 on Wednesday.
The S&P 500 slid 6.24 points, or 0.3%, to 2,104.50. The index is down from a high of 2,115.48 on Tuesday.
The Nasdaq fell 24.36 points, or 0.5%, to 4,963.53. The index has been inching closer to crossing the 5,000-point mark, something it has not done since March 2000 at the height of the dot-com era. It is now within 86 points of that peak.
The three main US stock indexes are all up for the year.
The current bull market, now in its sixth year, has been powered by strong corporate earnings growth and low interest rates, which make stocks more attractive relative to bonds. Strong job growth and improving consumer confidence have also encouraged traders, despite signs of sluggishness in Europe and elsewhere.
Some of that confidence appeared shaken on Friday, when the commerce department reported that the US economy grew at an annual rate of 2.2% in the October-December quarter, weaker than the 2.6% estimate last month. The latest growth projection represents a major slowdown from the previous quarter, which produced the strongest growth in 11 years.
Other economic bellwethers were more upbeat: an index of pending home sales, an indicator of potentially completed sales, rose in January and the December figure was revised higher to show a smaller decline. Separately, the University of Michigan's index of consumer sentiment slipped this month. It remains at the highest level in eight years.
"The market does not have a clear catalyst to either cause it to sell off or to surge forward, and we're getting a little expensive from a valuation perspective," said David Heidel, regional investment director at US Bank Wealth Management.
Investors should get a better sense of the economy and consumers' willingness to spend next week, when car makers report their February sales figures and the government issues its monthly update on hiring.
All told, eight of the 10 sectors in the S&P 500 ended lower, with technology stocks notching the biggest decline. The sector is up 4.2% this year. Consumer staples rose the most. Those stocks are up 2.9% this year.
Benchmark US crude rose 1.59 dollars to 49.76 dollars a barrel on the New York Mercantile Exchange. Brent crude rose 2.53 dollars to 62.58 dollars a barrel in London.
US oil prices appeared to stabilise in February at around the 50 dollar a barrel mark. That has made a key variable of business more predictable for investors, Kinahan said.
"That's really the kind of thing that gives stability to the stock market," Kinahan said.
US government bond prices rose. The yield on the 10-year Treasury note slipped to 1.99% from 2.03% late on Thursday.