Stocks fell, with the Standard & Poor’s 500 Index trimming a weekly gain, after benchmark indexes rallied to all-time highs Thursday amid optimism over the economic recovery.
Textron Inc. rose 1.1 percent after the manufacturer of Cessna aircraft said it will buy Beechcraft Corp. for $1.4 billion. FirstEnergy Corp. added 2.3 percent after the utility company was upgraded at Wells Fargo & Co. to outperform from market perform.
The S&P 500 fell less than 0.1 percent to 1,841.40 at the close in New York. The Dow Jones industrial average slipped 1.47 points, or less than 0.1 percent, to 16,478.41. Both measures posted their second weekly gain. Volume has been lower than average amid the Christmas holiday this week. About 4 billion shares changed hands on U.S. exchanges on Friday, 34 percent below the three-month average, according to data compiled by Bloomberg.
“A year-end rally like this is not usual, but we have to keep in mind trading volumes are light and corporate news is certainly sparse this week,” Robert Landry, the San Antonio-based executive director and money manager at USAA Investments, said by telephone. His firm oversees about $59 billion. “You can’t read too much into the market’s move. It’s somewhat of a Santa Claus rally and perhaps that’s attributed to some portfolios managers in the office making some year-end moves.”
The S&P 500’s retreat Friday halted a four-day rally that was fueled by improving economic data. A Labor Department report Thursday showed that jobless claims declined by more than forecast, boosting optimism in the world’s largest economy. There are no economic reports scheduled for Friday.
The benchmark equity index has advanced 29 percent in 2013, putting it on course for its biggest annual rally since 1997. The S&P 500 has gained 2 percent so far this month. December has been the second-best month for U.S. equity returns, according to data compiled by Bloomberg that starts in 1928. The average gain for the month is 1.5 percent, more than twice the overall monthly mean of 0.6 percent. The last December retreat for the S&P 500 was in 2007.
The Federal Reserve, which has made employment creation a determinant factor of its monetary stimulus, said on Dec. 18 that it will reduce the pace of bond buying amid faster-than- estimated economic growth. Three rounds of stimulus, known as quantitative easing, have sent the S&P 500 as much as up 172 percent from a 12-year low in 2009.
“I don’t see why stocks can’t have a reasonable year in 2014, given that the global economy does seem to very slowly improve and Fed has started a tapering program,” Landry said. “There are some things in place to suggest it could be a decent year for stocks but not on the magnitude we’ve seen this year.”
Energy producers added 0.5 percent for the biggest advance out of 10 groups in the S&P 500, as the price of crude topped $100. Nabors Industries Ltd. rallied 2.8 percent to $16.84 for the biggest gain since Nov. 8. Newfield Exploration Co. added 2 percent to $24.54, while Peabody Energy Corp. jumped 3.3 percent to $19.25.