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‘Schizophrenic’ markets shrug off Greek deal
Question of the Day
NEW YORK — U.S. stocks struggled for direction Monday, unsure of what to make of news about Greece’s debt workout and eclectic announcements from a few well-known U.S. companies, such as mattress maker Sealy and luxury retailer Michael Kors.
The Dow Jones industrial average and the Standard & Poor’s 500 ended the day higher, but the Nasdaq fell. Trading for the latter two indexes was choppy, as they wavered between small gains and losses for big chunks of the day.
The Dow was the most stable, staying above Friday’s close for all but a few minutes and closing up 37.69 points to 12,959.71. That marked four straight days of gains for the Dow, only the second time that has happened so far this year.
The S&P 500 and the Nasdaq spent much of the morning and early afternoon in the red, then bounced between gains and losses for the rest of the day. The S&P ended the day virtually unchanged at day’s end, up 0.22 points to 1,371.09. The Nasdaq fell 4.68 points to 2,983.66.
“The market is going to continue to feel very schizophrenic,” said Carol Pepper, CEO and founder of Pepper International, a money management firm in New York. “Some days it’s depressed, some days it’s excited, some days it’s terrified.”
The 10 industry groups in the S&P 500 were evenly split between gainers and losers. Utilities, which tend to attract nervous investors because of their relatively stability and generous dividends, rose the most. Markets in Europe were also divided. Germany did better than others, rising 0.3 percent. Greece fell 2.5 percent.
The news out of Europe seemed only to make predictions on where the market is heading more foggy. Greece persuaded private investors to agree to big losses on their bond holdings, which should help the country stave off default later this month. But the country is still in a severe recession.
Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J., said Greece is only a distraction from other deep-rooted problems throughout Europe, including brewing debt burdens in Portugal and Italy. Presidential elections in France add another layer of uncertainty because a new leader could backpedal on fiscal commitments made by President Nicolas Sarkozy.
The struggling European countries also can’t cut spending, which they’ll likely need to do to avoid bankruptcy, without angering their citizens. On Sunday, hundreds of thousands of people in Spain took to the streets in dozens of cities to protest cuts in government spending.
Greece has “become a touchstone for people to say, ‘Okay, things are getting better,’” Sica said. “But they had to force private investors to take losses, the European Central Bank has swelled their balance sheet, it’s going to be impossible to impose austerity on these countries. They haven’t really accomplished a single thing except buying time.”
News about the U.S. economy has also been opaque, with every sign of economic recovery met with another sign of economic slowdown. While the unemployment rate falls, some analysts raise questions about the quality of the new jobs being created, and others worry that the high price of gas will prevent people from spending on non-necessities, which is crucial to an economic recovery. The average price for a gallon of gasoline jumped nearly a nickel over the weekend, to $3.80. China, the superpower that has pushed the world economy forward even as other countries flagged since 2008, announced that its growth slowed at the end of last year.
The market’s knee-jerk nature has been highlighted in the past two weeks. The Dow powered positive news headlines when it closed over 13,000 on Feb. 28, a milestone it hadn’t reached since May 2008. But it’s failed to close above that line again. On one day last week, it plummeted more than 200 points over concerns about Greece, more than double its second-biggest loss so far this year.
“Everybody is stepping back and assessing whether the ride is over,” Sica said. “It’s almost as if investors get to a point where they scratch their head and say, ‘Does the market deserve to be here?’”
Several companies made big moves:
• Defibrillator maker Zoll Medical Corp. jumped 24 percent to $92.94 after its board agreed to a buyout offer of $93 per share from Japan’s Asahi Kasei Corp.
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