Stocks closed mostly lower Wednesday, after the Nasdaq composite index rose above the 2000 mark for the first time in nearly two years but immediately fell back.
Round numbers, such as 10,000 for the Dow Jones industrial average and 2000 for Nasdaq, represent psychological markers but don’t influence how investors value stocks, said analyst Paul Nolte at Hinsdale Associates in Hinsdale.
“Does it matter? I don’t think so,” he said.
Nonetheless, computer-driven trading strategies may be programmed to issue sell orders when benchmark numbers loom, he said.
In Wednesday’s action, gains by two stocks–General Motors and Merck–put the Dow Jones industrial average in positive territory for the day. The Dow added 19.78 points, to 9873.42.
GM benefited from a strong report Tuesday on November car sales and comments by an analyst that the company’s underfunded pension plan is being helped by this year’s stock market rally. Shares jumped $2.26, to $45.54, the highest level since September 2002.
Merck rose $1.50, to $43.63, after the company forecast higher profits next year.
But the broader Standard & Poor’s 500 index slipped 1.89, to 1064.73. Declines by Intel, Walt Disney, Bank of America and Wal-Mart Stores offset gains by Merck, Oracle, GM and Coca-Cola.
The Nasdaq, after reaching 2000.92, its first break above 2000 since January 2002, closed down 19.82, to 1960.25, in active trading. The Russell 2000 index of small-company stocks dropped 8.41, to 545.19.
New York Stock Exchange trading volume reached 1.41 billion shares. Losers held a narrow lead over winners.
Nasdaq trading volume totaled 2.18 billion shares, as losers topped winners by nearly a 2-1 ratio.
Investors hunting for the winning sectors and stocks for 2004 may be cashing in gains on 2003 winners to pay for repositioning their portfolios.
As a result, major market averages have displayed a muted response to a series of upbeat economic reports.
Trading appears to be in a saw-toothed pattern, Nolte said.
“For those who wanted a huge move up or a huge move down, it’s been frustrating,” he said.
The dollar lost ground against the euro for the fourth day in a row. The sliding dollar has become the big issue in end-of-year investment strategies, Nolte said. A falling dollar discourages non-U.S. investors from buying U.S. securities, thereby blunting rallies.
Another depressing factor on Wall Street has been the high level of selling by company insiders. Thomson Financial reported Wednesday that stock sales by company insiders totaled $4.5 billion in November, up 43 percent from October and the highest monthly volume since May 2001, when the bear market was just under way.
Insider selling last month was nearly double the five-year monthly average and was broad-based, involving 3,680 executives from 1,592 companies.
Among stocks in the news, business software developers Oracle and PeopleSoft gained on “buy” recommendations by brokerage firm UBS. Oracle rose 50 cents, to $12.90. PeopleSoft added 41 cents, to $21.49.
Tax preparer H&R Block dropped 87 cents, to $53.06. Morgan Stanley trimmed its investment rating on the stock.
Treasury securities slipped, reflecting fears of strong employment numbers Friday.
A report Wednesday on business conditions in the services sector of the economy hinted of a substantial growth in jobs in the months ahead.
Friday’s scheduled report from the Labor Department on job growth and unemployment in November will be affected by a major strike against grocery stores in California.
Nonetheless, economists forecast 150,000 jobs were created last month, up from 126,000 in October, according to surveys of economists by Reuters and Bloomberg News.
The price of gold closed higher, holding above the $400-per-ounce mark for a third day.
Oil futures traded above $31 a barrel, as traders sensed OPEC would boost prices to compensate for the weaker dollar.
Local news: First Health Group, Downers Grove, a health-care-benefits service provider, plans to repurchase up to 5 million of the company’s 94 million shares. Nonetheless, shares dropped 25 cents, to $20.85.
