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The Long, Slow Climb
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"We haven't had a 10 percent pullback for more than four years, and they normally occur every 19 months or so," said Bob Doll, president and chief investment officer for Merrill Lynch Investment Managers. "The market is acting tired." He said analysts have already reduced overall earnings growth estimates for 2006 from 13 percent in January to 10 percent now. "We think that number will end up at 7 percent" by the end of the year, Doll said. But even Doll is not predicting a recession or suggesting that investors pull out of equities. Rather, he said, a pullback might be "the pause that refreshes."
The rising stock market has floated most boats -- large-, medium- and small-capitalization stock indexes have all seen increases of more than 4 percent this quarter. But some sectors clearly did better than others. The telecommunications companies that are part of the S&P 500 have risen about 14 percent since January 1, while prices of utility stocks in the same index fell slightly. "After three years of underperforming expectations, [telecom] was an overlooked sector," Caffrey said. When investors realized that prices to consumers were not falling as fast as they had been and that the sector might therefore have good cash flow, they jumped right in, he said.
The big winners this quarter include Ciena Corp. of Linthicum, Caterpillar Inc. and Walt Disney Co., while big losers included Amazon.com, Intel Corp. and Tyson Foods Inc.
Indexes
New York Stock Exchange composite index fell 38.59, to 8233.20.
American Stock Exchange index fell 13.92, to 1935.99.
Russell 2000 index of smaller-company stocks rose 2.55, to 765.14.
Volume
NYSE: 2.30 billion shares, down from 2.33 billion on Thursday. Advancers outnumbered decliners 10 to 9.
Nasdaq: 1.91 billion shares, down from 2.18 billion. Advancers outnumbered decliners 8 to 5.
Commodities
Crude oil for May delivery: $66.63, down 52 cents.
Gold for current delivery: $581.80 a troy ounce, down from $586.70 on Thursday.
