NEW YORK — Investors sought safety Friday by selling stocks for a third straight day in favor of the dollar and Treasurys, including some short-term debt that offered almost no return.
The energy sector led the stock market lower because of a pullback in commodity prices and Goldman Sachs’ removal of coal producer Peabody Energy Corp. from its “conviction buy” list. The technology sector also was weak, hurt by a bigger-than-expected drop in profits at personal-computer maker Dell Inc.
The Dow Jones industrial average ended down 14.28 points Friday, or 0.14 percent, at 10,318.16, up 0.5 percent for the week but off 1.1 percent over the course of a three-day losing streak. The skid is the Dow’s longest since a four-day pullback Sept. 30 to Oct. 2.
Confidence that the Federal Reserve will keep its interest-rate target near zero well into 2010 lifted major stock indexes to fresh 13-month highs early last week. Now, traders and analysts say the flow of cheap money is going into other assets, though few expect the trend to continue.
“It looks like some of this is investors shutting down for the end of the year,” taking money out of profitable stock bets to temporarily “park” it in safe havens, said Paresh Upadhyaya, a currency-portfolio manager at Putnam Investments in Boston. “But if you look at expectations for a Fed (interest-rate) hike, they’ve still been pushed further out. That should favor taking on more risk, not less, over the long term.”
“I don’t think we’re having a real panic here,” said strategist Jim Paulsen of Wells Capital Management in Minneapolis. “You can tell because the market’s decline hasn’t been that big, even though it’s gone on for a couple of days. We’re still in a position to come back and fight again next week.”
Other stock measures edged lower Friday. The technology-focused Nasdaq composite index was off 0.5 percent to 2,146.04, off 1 percent on the week. It was hurt in part Friday by a 10 percent decline in Dell.
The S&P 500 was off 0.3 percent to 1,091.38, led by a 0.9 percent decline in its energy sector. The S&P categories posting gains Friday were utilities, consumer staples and health care, all sectors traditionally used as defensive bets.
Friday’s decline pushed the S&P into the red for the week, off 0.2 percent.
“I wouldn’t say we’re seeing signs of a market top, but it certainly doesn’t look encouraging,” said David James, senior vice president at James Investment Research, an analysis and portfolio-management firm in Alpha, Ohio. “The only good thing we can say is that we haven’t seen the smart money on Wall Street enter in a big way in the last half-hour of each trading session lately,” a phenomenon that often indicates last-ditch speculative buying before a pullback.
The dollar rallied against the euro and most other foreign currencies after the European Central Bank said it will tighten the standards under which it accepts newly issued asset-backed securities as collateral from banks.
