Wall Street retreats after rally, but Apple up again
NEW YORK (Reuters) - The S&P 500 broke a five-day streak of gains on Wednesday as investors found little reason to extend a rally that took the benchmark index to four-year highs.
While the major averages ended essentially flat, three stocks fell for every gainer on the New York Stock Exchange, a sign of investors pulling back from gains that have lifted numerous blue-chips to 52-week highs. Procter & Gamble (PG.N), the consumer products maker, hit a 52-week high at $67.95 before dipping 0.1 percent to close at $67.85. The stock of major U.S. oil company Chevron (CVX.N) climbed to a 52-week high at $112.28 during the session, only to slip 0.5 percent to end at $110.69.
The S&P 500 hit an intraday high of 1,399.42, its highest level since early June 2008, before pulling back in the afternoon. The 1,400 level could act as a barrier to further gains.
Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio, noted that "higher beta" stocks - those that outperform broader averages - aren't holding up as well, which he said is "often indicative of a market that is struggling to maintain momentum."
The Russell 2000 .TOY was down nearly 1 percent, notably.
Momentum continued in Apple Inc (AAPL.O), limiting losses in big-cap averages. Shares of Apple surged for a sixth straight day, climbing 3.8 percent to $589.58 following positive comments from analysts. Morgan Stanley and Canaccord Genuity both lifted their price targets on the stock to above $700.
The stock is up about 46 percent so far this year, leading some to call for a pullback in the largest U.S. company by market value.
"We do worry that the move in Apple has been a little too much, too fast, as the fear is that as shares rise, expectations will get overly optimistic," said Channing Smith, co-portfolio manager of the Capital Advisors Growth Fund at Capital Advisors in Tulsa, Oklahoma.
The Dow Jones industrial average .DJI rose 16.42 points, or 0.12 percent, to 13,194.10 at the close. The Standard & Poor's 500 Index .SPX slipped 1.67 points, or 0.12 percent, to 1,394.28. The Nasdaq Composite Index .IXIC inched up just 0.85 of a point, or 0.03 percent, to 3,040.73.
Bank stocks, a major component of the S&P 500's 11 percent gain for the year, led a late-day surge in Tuesday's rally after JPMorgan Chase & Co (JPM.N) announced it will raise its dividend. The KBW Bank index .BKX continued its rally on Wednesday, up 1.3 percent, and is now 22 percent higher this year.
"JPMorgan's news yesterday was so unexpected that it had a disproportionate effect on the market. We were looking for an excuse to move higher and we found it," McCain said.
The Fed said late Tuesday most of the largest U.S. banks passed their annual stress tests of capital strength in a report that underscored the financial sector's recovery, but called out a few that failed, including Citigroup Inc (C.N). Shares of Citigroup lost 3.4 percent to $35.21 for the day.
The central bank also forecast "moderate" growth over coming quarters with the unemployment rate declining gradually versus the "modest" growth the central bank said it expected in January. The change in language, used in the Fed's statement after a one-day policymakers' meeting, was seen as a slight upgrade of the economic outlook.
Volume was about 7.45 billion shares on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year's daily average of 7.84 billion.
The increasing optimism about the U.S. economy helped lift the dollar to an 11-month high against the yen and a 1-month high versus the euro. <USD/>
The greenback's advance alongside a strong equities market underscores investors' bet that the U.S. economic recovery is sustainable.
NXP Semiconductors (NXPI.O) rose 3.2 percent to $25.66 after Goldman Sachs added the chip maker to its "conviction buy" list and raised its price target to $30.
But online game maker Zynga Inc (ZNGA.O) reversed earlier gains, sliding 0.2 percent to $13.35. In morning trading, the stock had climbed to an intraday high of $13.70. Before the opening bell, Zynga announced a secondary offering of up to $400 million.
(Editing by Jan Paschal)
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