NEW YORK — Stocks got off to a sluggish start on the first day of trading in the New Year, ending Friday mixed as a report showed that manufacturing growth slowed in December.
U.S. factory activity grew at the slowest pace in six months last month, weakened by declines in orders and production, according to the Institute for Supply Management. While the sector is still in good health, growth was slower than economists had forecast.
The stock market climbed to record levels at the end of 2014, and investors may be reassessing the outlook for the market at the start of the year, said Brad McMillan, chief investment officer for Commonwealth Financial, an independent broker-dealer firm. While growth prospects in the U.S. look decent, in Europe and Asia they are less encouraging.
Investors are “stepping back and saying, ‘Now we’re in the New Year; let’s take a fresh look,’ ” McMillan said.
The Standard & Poor’s 500 index on Friday fell 0.70 points, or less than 0.1 percent, to 2,058.20. The Dow Jones industrial average rose 9.92 points, or less than 0.1 percent, to 17,832.99. The Nasdaq composite dropped 9.24 points, or 0.2 percent, to 4,726.81.
Stocks had another good year in 2014, but the rally faded in the final days of the year. The S&P 500 climbed 11.4 percent, after rising 29.6 percent in 2013. To justify those gains, company earnings will have to keep growing.
“We don’t think the U.S. equity market is going to do anywhere near as well this year” as it has in recent years, said Dan Morris, global investment strategist at TIAA-CREF, an investment manager. “There’s a lot more that could go wrong than could go right in the U.S.”
Morris says stock investors should expect returns in the single digits this year and should brace themselves for higher levels of volatility as the Federal Reserve moves toward its first rate increase since 2006.
