Stocks close lower, ending Dow's 10-day rally
Stock markets fell on Friday, ending the longest winning streak for the Dow Jones industrial average in nearly 17 years.
The Dow dropped 25.03 points, or 0.2 percent, to 14,514.11. The Standard & Poor's 500 index fell 2.5 points, or 0.2 percent, to 1,560.70, just shy of an all-time high from October 2007. The Nasdaq composite index dropped 9.86 points, or 0.3 percent, to 3,249.07.
The Dow had notched a 10-day winning streak through Thursday, its longest since November 1996. The string of wins pushed the blue-chip index up 484 points, or 3.4 percent, to a Thursday close of 14,539.14. The index's closing price on Feb. 28, just before the rally began, was 14,054.49.
Trading on Friday was tentative because investors feared that rising inflation could cause the Federal Reserve to retreat from policies aimed at boosting markets. The government said consumer prices increased in February at the fastest pace in more than three years.
The increase was driven by a spike in gasoline prices; the core index, which excludes the volatile energy and food categories, increased more modestly. But both figures rose 2 percent compared with a year earlier, enough to get investors' attention, said Peter Tchir, who runs the hedge fund TF Market Advisors.
“It's real and it's a drag, and I think people are growing concerned that it can get out of control quickly,” Tchir said. He said signs of economic improvement and inflation “make them wonder if there will be continued market pressure on the Fed” to end its bond-buying programs.
The market's recent rally to multiyear highs was fueled in part by the Fed's efforts to keep interest rates low and encourage investment.
The Dow's win streak matched a 10-day run that ended on Nov. 15, 1996. To find a longer uninterrupted series of gains, one would have to go back to Jan. 3, 1992, when the Dow rose for 11 consecutive days.
The index's longest winning streak was 14 days, ending June 14, 1897.
Stocks opened lower and extended their losses at 10 a.m. after a closely watched index of consumer sentiment fell to its lowest level since the end of 2011. The University of Michigan's preliminary consumer sentiment index dropped 5.8 points to 71.8, according JPMorgan analyst Daniel Silver said in a note to clients.
Stocks reversed the losses briefly at midday, then drifted back down in the afternoon.
Traders are processing big banks' scores on “stress tests” administered by the Fed. The Fed said late Thursday that both JPMorgan Chase and Goldman Sachs need better plans to cope with a severe recession. It gave them until September to revise their plans.
Still, the Fed allowed both banks to increase their dividends and buy back their stock, signaling that regulators believe the banks are fundamentally sound.
The stock of JPMorgan fell 98 cents, or 1.9 percent, to $50.02. Goldman's stock rose 82 cents, or 0.5 percent, to $154.84.
The S&P 500 closed just five points from its all-time closing high of 1,565, reached in October 2007.