Wall Street closed a whipsaw week in quiet fashion on Friday as traders, money managers and economists continued to debate whether the worst of a now three-week-long sell-off had passed.
While consensus on the future was hard to find, even bearish analysts took solace in the fact that the Dow Jones industrial average finished the week above 10,000 after dropping below that level on Monday for the first time this year.
The Standard & Poor's 500-stock index and the Nasdaq composite index also rallied back from lows touched Wednesday afternoon. All three indexes were down slightly for the week.
The Dow closed yesterday at 10,012.87, up 2.13. The S&P index was down 0.74 to 1,095.70, and the Nasdaq lost 21.78, to 1,904.25.
"It's one of those times where the market is struggling to put in a sustainable bottom," said Brian Belski, fundamental market strategist at investment bank Piper Jaffray. "There is just so much indecision with the confluence of all these events."
The events Belski referred to include soaring oil prices, economic reports suggesting that inflation may be reviving and continued dismal news from the war front in Iraq.
All those things tend to drag stock prices down. Higher oil prices lead to higher gas prices. Any hint of inflation leads to fear that the Federal Reserve will move more quickly to raise interest rates; higher rates cut into corporate earnings, making stocks look expensive.
Bad war news tends to raise uncertainty about the future of the Bush administration at a time when Wall Street is betting on a continuation of current fiscal policy. Bad news from Iraq also leads to concern that already strained oil supplies will not become more plentiful.
Moving in the other direction, meanwhile, are reports showing the economy continuing to pick up steam and stronger-than-expected first-quarter earnings reports. According to Thomson First Call, of the 461 companies in the S&P 500 that have reported earnings thus far, 345 have beaten analysts' expectations while just 62 have come in below expectations.
Overall, earnings are about 27 percent ahead of the first quarter in 2003, according to the company's tallies. But analysts now expect earnings to slow the rest of the year, as the Fed attempts to keep the economy from overheating. And even strong earnings reports aren't always enough to keep stock prices up. Computer maker Dell Inc., for example, reported strong income on Friday but worries over rising inventory levels and higher costs for memory chips contributed to a 3 percent drop in the company's stock to $34.72.
Normally, analysts say, the markets already should have priced in an expected interest rate increase in June. But world politics, notably the scheduled June 30 transfer of power in Iraq, have made that more difficult. Some now think the Fed might delay raising rates if the handover fails to occur or goes badly.
That uncertainty has led some to suggest that the stock markets are likely to at best tread water until both the economic and geopolitical pictures become clearer.
"I wouldn't be surprised if the market was flat-to-down during this period," said Ian Morris, chief U.S. economist at HSBC.
Robert Bissell, president of Wells Capital Management in Los Angeles, noted that volatility in the market is greatly increased by the proliferation of professional investors who make short-term bets on stock prices. "When you have 11,000 hedge funds, that's going to amplify moves both up and down," he said.
* The New York Stock Exchange composite index fell 1.24, to 6293.34; the American Stock Exchange index rose 4.98, to 1171.20; and the Russell 2000 index of smaller-company stocks fell 3.41, to 543.76.
* Advancing issues outnumbered declining ones by 4 to 3 on the NYSE, where trading volume fell to 1.34 billion shares, from 1.41 billion on Thursday. On the Nasdaq Stock Market, decliners outnumbered advancers by 2 to 1 and volume totaled 1.51 billion, up from 1.50 billion.
* The price of the Treasury's 10-year note rose $7.81 per $1,000 invested, and its yield fell to 4.77 percent, from 4.86 percent on Thursday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 114.21 yen, down from 114.48 late Thursday, and a euro bought $1.1886, up from $1.1823.
* Light, sweet crude oil for June delivery settled at $41.38, up 30 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $377.00 a troy ounce, from $374.80 on Thursday, on the New York Mercantile Exchange's Commodity Exchange.