NEW YORK (AP) — A three-day rally ground to a halt Friday as traders grew cautious about buying too much too quickly ahead of the weekend.
Stocks traded mixed as energy and financial companies slid and technology shares wavered after posting big advances this week.
Following a three-day rally that has lifted the Dow Jones industrials nearly 10 percent, analysts say investors are likely taking profits ahead of the weekend.
“I wouldn’t be surprised if trading activity falls off as we head to the end of the week as investors try to lock in profit,” said Michael Sheldon, chief market strategist at RDM Financial Group.
Financial stocks, which led this week’s rally, largely fell despite reports that Citigroup Inc.’s chairman Richard Parsons said the bank doesn’t need additional government support. Word that Citigroup, which has received three rounds of emergency funding, was having its best quarter since 2007 sparked the beginning of this week’s advance on Tuesday.
Bank of America Corp. and JPMorgan Chase & Co. also said this week that their banks have been profitable so far this year. The market has been quick to embrace the encouraging signs about the financial system after weeks of unrelenting selling spurred on by concerns that the government’s efforts to break a freeze in lending weren’t working.
Despite the glimmers of hope, analysts are still a long way away from declaring that the worst is over. “We are going to remain cautious because the slightest bit of bad news could turn this thing around,” said Joe Arnold, investment adviser at Dawson Wealth Management.
In early afternoon trading, the Dow Jones industrial average rose 17.36, or 0.2 percent, to 7,187.42. The Standard & Poor’s 500 index fell 1.30, or 0.2 percent, to 752.04, while the technology-heavy Nasdaq composite index fell 3.31, or 0.2 percent, to 1,422.79.
The Russell 2000 index of smaller companies fell 0.88, or 0.2 percent, to 389.24.
About eight stocks fell for every seven that rose on the New York Stock Exchange, where volume came to 761.5 million shares.
Earlier Friday, the Commerce Department said the trade imbalance dropped to $36 billion in the first month of the year, a 9.7 percent decline from December and the lowest level since October 2002. The improvement reflects a drop in demand for crude oil imports and other foreign goods.
Stocks have also been lifted this week by surprisingly positive reports from companies across a range of industries. General Motors Corp. said Thursday it wouldn’t need the latest installment of government bailout money, and a cut in General Electric Co.’s credit rating on the same day wasn’t as bad as some had feared.
There was renewed hope Friday for fresh stimulus measures in China and Japan. Chinese Premier Wen Jiabao says the government is ready to roll out even more measures, while Japan’s prime minister is calling for a new stimulus package.
The news, which sent overseas markets surging, comes as finance ministers and central bankers from the Group of 20 countries gather Friday. Europeans are calling for greater oversight of financial markets, while the U.S. is backing bigger stimulus spending.
Analysts said technical factors that have helped drive the market this week are continuing Friday, including short-covering, when traders buy stock to cover “short” bets, or bets that a stock will fall.
However, Michael Sheldon, chief market strategist at RDM Financial Group, said some longer-term investors are starting to dip their toes back into the market.
“The biggest question for investors now is, ‘Have we put in the lows and is it safe to get back into the water?’ ” he said. “The economic data overall continues to be very difficult, but if we start to see reports that are bad but less negative as we go through the second quarter, that could start to bring some buyers in off the sidelines.”
Also feeding optimism about banks this week was news that an accounting board may recommend an easing of financial reporting rules of tough-to-sell assets. Banks say a change in so-called “mark-to-market” accounting rules would help their bottom lines.
Citigroup shares added 9 cents, or 5.9 percent, to $1.77, while Bank of America rose 4 cents to $5.89. Shares of General Motors extended their gains, jumping 46 cents, or 21.1 percent, to $2.64.
Bonds were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.89 percent from 2.86 percent late Thursday. The yield on the three-month T-bill fell to 0.18 percent from 0.22 percent late Thursday.
The dollar fell against other major currencies, while gold prices rose.
Light, sweet crude for April delivery fell $1.13 to $47.90 a barrel on the New York Mercantile Exchange.
Earlier, Britain’s FTSE 100 rose 1.1 percent, Germany’s DAX index slipped 0.1 percent, and France’s CAC-40 rose 0.4 percent. Japan’s Nikkei stock average jumped 5.2 percent.