Dow Rally Fatigue: Stocks Inch Lower

Wall Street retreats as energy prices drop and investors show fatigue after a run that put the Dow, S&P and Nasdaq at 2009 highs. Even though the markets received more positive economic news on Friday, stocks closed slightly lower, dashing the bulls' hopes of sending the S&P 500 to its first six-day win streak since June 2007.

The pace of the advance, combined with the seasonal tendency for September and October to be weak for stocks, led many to predict a fall selloff. But that hasn't happened and doesn't seem to be brewing as of yet. Since bottoming March 9 at a more than 12-year low, the S&P 500 has risen 54% as investors have gone from pricing in a depression to a recession to a recovery.

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The Dow Jones Industrial Average fell 22.07 points, or 0.23%, to 9605.41, the Standard & Poor's 500 slid 1.41 points, or 0.14%, to 1042.73 and the Nasdaq Composite dropped 3.12 points, or 0.15%, to 2080.90.

For the week:
The Dow is up 164.14, or 1.7 percent.
The S&P is up 26.33, or 2.6 percent.
The Nasdaq is up 62.12, or 3.1 percent.

Even with Friday's minor losses, all three major indexes closed the week solidly higher and the S&P 500 and Nasdaq Composite notched their biggest weekly gains since July 24. But rally fatigue appeared to set in on Friday as stocks received just fleeting jolts from a pair of positive economic stories: the highest level for consumer sentiment since June and a better-than-expected outlook from economic bellwether FedEx(FDX: 77.34, 4.7, 6.47%).

“The market is tired. Everybody is expecting the pullback. We may be getting the beginning of what may be a bigger selloff,” NYSE trader Doreen Mogavero told CNN Money. Incredibly, the Dow closed within 0.10 points from its close the day before the Sept. 11 terrorist attacks. It ended at 9605.51 on Sept. 10, 2001.

Meanwhile, the closely-watched Shanghai Composite soared overnight amid an avalanche of economic data out of China that suggest that country’s economy is well on its way to recovering. The Chinese government reported large jumps in retail sales, industrial production and new loans.
Oil prices and stocks:

Dollar-traded commodity prices have been rising on the weak greenback and on bets of a global economic recovery. But oil prices reversed course Friday, despite the still-weak dollar, dragging oil stocks down in tandem.

U.S. light crude oil for October delivery fell $2.65 to settle at $69.29 a barrel on the New York Mercantile Exchange. That battered Dow components Exxon Mobil and Chevron.

However, stock declines were broad based, with 21 of 30 Dow issues falling. In addition to the oil components, other big losers included IBM, Hewlett-Packard and Procter & Gamble.