By Saumya Vaishampayan
U.S. stocks ended mixed Friday, with the Dow industrials eking
out a gain on the first trading day of 2015.
The Dow Jones Industrial Average added 9.92 points, or 0.1%, to
17832.99. For the week, the blue-chip index fell 1.2%.
The S&P 500 index lost 0.70 point to 2058.20 and declined
1.5% for the week. The Nasdaq Composite Index fell 9.24 points, or
0.2%, to 4726.81. For the week, it lost 1.7%.
The stock market was closed Thursday for New Year's Day.
Stocks spent much of the day in negative territory in the wake
of weaker-than-expected manufacturing data. The Institute for
Supply Management's manufacturing purchasing managers index fell to
55.5 in December from 58.7 in November. Economists surveyed by The
Wall Street Journal had expected a reading of 57.4.
The yield on the 10-year Treasury note declined to 2.123%.
Yields fall as prices rise. The U.S. dollar surged against other
major currencies, with the WSJ Dollar Index at an 11 1/2-year
high.
Many market participants say the backdrop for U.S. stocks
remains positive. A continued economic recovery should brighten the
outlook for corporate profits. The sharp slide in crude-oil prices
in 2014 should put more money in the pockets of consumers, which
could spur spending and boost economic and corporate-profit
outlooks.
"The continued expansion in the U.S. economy...means increased
revenue and earnings," said Robert Pavlik, chief market strategist
at Banyan Partners, adding that interest rates and inflation remain
low. "All these [factors] are combining to give a very positive
feeling" for stocks, he said.
The Federal Reserve is widely expected to lift short-term
interest rates in 2015. Still, Mr. Pavlik said he isn't concerned
about slightly higher rates weighing on the economy or denting
further gains in stocks.
"The Federal Reserve is not going to move on interest rates
unless the economy is getting to a point where it can sustain an
increased interest rate," he said.
Global manufacturing reports were also tepid. Activity in the
eurozone's manufacturing sector in December expanded at a slower
pace than previously estimated. China's official manufacturing
Purchasing Managers Index slipped to its lowest reading in a year
and a half.
"People are worried that U.S. manufacturing can't be an island
in a world of weaker growth," said Kate Warne, investment
strategist at Edward Jones.
"There are concerns more broadly about how strong the global
economy is, " she added. "Today's slightly weaker data in the U.S.
just reinforced those concerns."
On Friday, stocks in consumer discretionary sector fell the most
on the S&P 500, down 0.7%.
Energy stocks on the S&P 500 rose 0.4%. Those stocks have
fallen 8.4% over the past 12 months amid the slide in oil prices,
and have begun attracting buyers at lower prices.
One of those buyers is Matt Peron, head of global equity at
Northern Trust, which manages $923 billion.
"We've started to wade back into the sector," Mr. Peron said,
adding that he is interested in companies with less debt. He said
he has recently added to existing positions in integrated oil and
oil-services companies.
Investors also paid attention to comments from Mario Draghi,
president of the European Central Bank. Mr. Draghi told the German
daily Handelsblatt in an interview published Friday that interest
rates in the currency bloc are set to stay lower for longer.
Risks surrounding the central bank's ability to fulfill its
price-stability mandate have increased over the past six months, he
said, and medium-term inflation expectations have fallen since
June. That could add to speculation that the ECB could increase its
stimulus efforts sooner rather than later, including purchases of
sovereign bonds.
The Stoxx Europe 600 fell 0.4%.
In commodity markets, crude-oil futures fell 1.1% to $52.69 a
barrel. Gold futures added 0.2% to $1186.00 an ounce.
In corporate news, Linn Energy said it cut its oil and
natural-gas budget by 53% to $730 million in 2015, the latest
energy company to reduce its drilling budget amid the slide in oil
prices. Shares rose $1.22, or 12%, to 11.35.
Pacific Ethanol agreed to buy Aventine Renewable Energy Holdings
for about $190 million in stock. Pacific Ethanol shares rose 0.61,
or 5.9%, to 10.94. Shares of Aventine added 1.40, or 12%, to
13.50.
--Josie Cox contributed to this article.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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