US stocks finished a week of mixed economic data divided, with the tech-rich NASDAQ Composite Index scoring gains as the other two indices retreated from record highs.
The Dow shed 95.24 points (0.56 percent) over the week to finish at 16,851.84, while the S&P 500 dipped 1.91 (0.10 percent) to 1,960.96 after both indices had finished the previous week on historic highs.
By contrast, the NASDAQ advanced 29.89 points (0.68 percent) to close at 4,397.93 after the tech-rich index picked up momentum in part due to the highly successful initial public offering of video camera maker GoPro Inc, which gained nearly 50 percent from its offering price in its first two days of trade.
Analysts said stocks were still fairly well positioned for further gains given confidence in the economic recovery and somewhat lower anxiety on Iraq, as evidenced by an ebbing of oil prices.
“This bull market remains intact because investors believe we are moving further and further away from a recessionary potential,” S&P Capital IQ chief investment strategist Sam Stovall said.
Still, Stovall said some of the week’s disappointing economic data was a “bit unnerving” and suggestive of “a half-speed recovery mode.”
The week’s most dramatic bit of data was Wednesday’s report that GDP fell at a 2.9 percent annual pace in the first quarter of the year, much worse than the previous estimate of 1 percent and the sharpest decline in five years.
However, though shocked at the report, analysts said it had minimal implications for stocks.
“It was a surprise, but it should really be irrelevant because it’s in the past,” said Bill Lynch, director of investment at Hinsdale Associates Inc.
Among other data, reports showed new home sales last month reached their fastest pace in six years and that US consumer confidence this month jumped to its highest level since January 2008.
However, consumer spending, which accounts for more than two-thirds of the nation’s economic activity, rose a mere 0.2 percent last month after a flat April. Analysts were also disappointed at the 1 percent drop in durable goods orders seen the previous month.
The week’s corporate news included more takeovers, which have helped propel the broader market this year, analysts said.
The pace of the country’s merger and acquisition activity this year “continues to marvel and amaze,” a S&P Capital IQ report said, adding that the US market is on pace to notch its first US$1 trillion-plus year since 2007.
Major transactions this week included aluminum producer Alcoa Inc’s US$2.9 billion purchase of Firth Rixson Inc, a British manufacturer of aerospace jet engine components, and software giant Oracle Corp’s US$5.3 billion takeover of MICROS Systems Inc, which has more than a half-million customers, including clients in hotels and retail.
Broadcasters like CBS Inc (+3.7 percent) and cable companies like Comcast Corp (+2.6 percent) got a lift after the US Supreme Court ruled that online television startup Aereo Inc violated copyright laws by retransmitting broadcasts through antenna equipment. The court ruled that Aereo effectively operates like a cable company and must therefore pay for broadcast rights.
Yet oil refiners, including Valero Energy Corp (-9.9 percent) and Marathon Petroleum Corp (-11.4 percent) plummeted after the US issued two licenses for the export of condensate for the first time in four decades, a move that could lead to further easing of the crude oil export ban and push prices higher.