Posted on: Tuesday, January 4, 2005
Market kicks off 2005 with an atypical loss
By Michael J. Martinez
Associated Press
NEW YORK — Wall Street began 2005 with a loss yesterday as investors shored up portfolios and abandoned risky positions taken during the post-election rally. The drop came despite falling oil prices and a better-than-expected sales forecast from Wal-Mart Stores Inc.
"Usually, you see a lot more speculative trading to start the new year, with all the new money coming in," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "But here, you're seeing a big move to quality, large-cap stocks. I think there's been a realization that these stocks are attractively priced."
As investors sold off stocks, they overlooked a sharp drop in crude futures, triggered by mild weather in the Northeast and reports of increased crude production. A barrel of light crude was quoted at $42.13, down $1.32, on the New York Mercantile Exchange.
A mix of economic news further sapped any momentum stocks may have enjoyed. Construction spending took an unexpected hit in November, falling 0.4 percent for the month, the Commerce Department said.
The Institute for Supply Management's manufacturing index rose to 58.6 in December, from 57.8 in the previous month and edging past Wall Street's prediction of 58.5.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.93 billion shares, compared to 999 million on Friday.
While the stock market has usually opened the new year with a buying spree, investors were picky, favoring large-caps with solid balance sheets over small-caps and more speculative bets. Analysts said Wall Street's customary new year buying could have been accelerated into 2005 by the market's rally in November and December.
