Heavy crosscurrents in the stock market this week first pushed stocks forward and then backward, leaving the market with a small loss.
The federal government's quarterly refunding and lower jobless claims provided some good news while the declining money supply, concern over President Bush's health and the troubled First Capital Life Insurance Co. provided bad news. The bad news eventually overwhelmed the good.The market went up three days and down two. Monday and Wednesday the market had moderate gains and a big advance Thursday. However, large losses Tuesday and Friday eliminated all the gains.
The Dow Jones industrial average plunged 50.98 Friday to end the week at 2920.17. For the week, the Dow fell 18.69, or less than 1 percent.
Broader market indexes like the New York Stock Exchange Composite index and Standard & Poor's 500 index also dropped. S&P's 500-stock index dropped 5.06 to end the week at 375.74, and the New York Stock Exchange composite index dropped 2.53 to end the week at 205.87.
Declines led advances 1,003-912 among the 2,229 NYSE issues traded this week. Weekly Big Board volume totaled 971,612,310 compared with 1, 063,740,230 the prior week and with 987,629,814 a year ago.
The market, worried about Bush's health, managed a small gain of 2.78 in light trading Monday. Traders were restrained because of holidays in overseas trading and a quarterly Treasury refunding.
After five straight winning sessions, the Dow suffered a 24.15 loss Tuesday. Traders pointed to the federal government's quarterly auction of 3-year-notes, where demand was good, but not great.
The market rebounded Wednesday but without conviction. The Dow advanced 13.41 due to strong demand for the Treasury's auction of 10-year notes. However, most investors lacked enthusiasm, analysts said.
When the government's refunding ended Thursday, the market relaxed and advanced 40.25. A wave of program trading also helped push the market ahead.
A worried market fell heavily Friday, declining 50.98. Analysts blamed the decline on concern over First Capital of Sacramento, Calif., a drop in the Treasury bond market, a new supply of securities coming onto the market and technical factors.
"In January, we had a homogeneous rally; all the stocks went up, but now we're seeing crosscurrents" said Paul Kronlokken, technical analyst for Piper, Jaffray & Hopwood in Minneapolis.
After the market crested in April, there was heavy profit taking.
"Some stocks had pulled back to ideal buying points," Kronlokken added. Other stocks didn't look as attractive. Investors buy some stocks and sell others.
"So, the market goes up 20 or 30 points and then goes down 20 or 30 points," he continued. "It's backing and filling, a consolidation of gains."
Kronlokken said this will stabilize the market's overall gains, which is better than a too-rapid advance.
"It's like climbing to the top of the ladder. You go up too high and you get dizzy," Kronlokken said.
Hugh Johnson, chief economist for the First Albany Corp. in Albany, N.Y., felt conflicting forces this week pulled the market in different directions.
"The principal focus was on the three quarterly refundings," Johnson said.
"If it looked like the auction was going well, the market did well. If it looked like the auction went poorly, so did the market," Johnson said.
Larry Wachtel, market analyst for Prudential Securities Inc., said, "The whole week was colored by the bond market. The reception wasn't good for the 3 year notes, better than expected for the 10 year and not too well for the 30 year."
"The market lacks any clear cut focus," Wachtel added. "It can be bopped around by any breeze."