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Stock market struggles to keep grip on record levels

U.S. stock indexes switched between small gains and losses Thursday, as investors paused after consecutive days of record-setting gains for equities.

The SP 500 index

SPX, -0.24%

was off by 3 points, or 0.2%, to 2,346, retreating from an intraday high set shortly after the market opened at 2,351. Energy and consumer-discretionary shares led the decliners, while real estate and utilities shares were attracting buyers.

The Dow Jones Industrial Average

DJIA, -0.12%

 was off by 4 points, or less than 0.1%, at 20,608, with gains from components like Cisco Systems Inc.

CSCO, +2.81%

being weighed down by losses from Caterpillar Inc.

CAT, -0.98%

  and Chevron Corp.

CVX, -1.50%

 

Meanwhile, the Nasdaq Composite

COMP, -0.24%

 was down 9 points, or 0.2%, at 5,811, after the index matched its longest streak of closing records, seven straight, going back to 1999.

On Wednesday all closed at record highs for a fifth session in a row, something the three gauges haven’t done since January 1992.

The three benchmarks are up between 3% and 4% since the start of the month, helped by President Trump’s promises of a “massive” tax plan. Also in focus were upbeat remarks on the U.S. economy from Federal Reserve Chairwoman Janet Yellen, who has also signaled a March interest-rate hike is possible, while noting that the economy is on a solid footing.

“We’ve had a big run in the near term, so some weakness is normal especially if you want the bull run to continue,” said Ryan Detrick, senior market strategist for LPL Financial, said in an interview. “You see these records and you almost don’t want to see them, you want more slow and steady.”

On the other hand, Detrick noted that the SP 500 has gone 43 sessions without an intraday move of 1% or more, suggesting the market appears afraid to make a big leap, and increasing the chances that the extended period of low volatility we’ve enjoyed for a year cannot last too much longer.

Since the election, the CBOE Volatility Index

VIX, +0.58%

 has tumbled 36% and has not spent much time above the 15 mark. The 50-day average for the VIX stands at 11.81 currently, compared to a year ago when it was at 21.64, whereas 20 is the long-term average.

Frank Cappelleri, executive director at Instinet, LLC, in research notes to clients indicated that a correction could be around the corner, citing high levels of optimism, which can be contra-indicators.

“But it also may mean that the market’s long-term uptrend simply has reignited after a few years of violent back and forth price action,” Cappelleri said.

Other analysts warned that markets aren’t taking the risk of higher rates seriously enough.

“This rally may come to a quick end if expectations for a March rate hike begin increasing,” warned ADS Securities researcher Konstantinos Anthis in a note Thursday.

The market sees a 22% chance of a rate rise in March, down from 31% on Wednesday, according to the CME Group’s FedWatch tool.

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Other markets: European stocks

SXXP, -0.37%

traded lower, while Asian markets closed mixed. Oil futures

CLH7, +0.43%

 and gold futures

GCH7, +0.65%

 stepped higher, as the ICE U.S. Dollar Index

DXY, -0.53%

pulled back.

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Individual movers: Networking-equipment giant Cisco Systems Inc.

CSCO, +2.81%

 rose 2.9% after posting better-than-expected results late Wednesday.

Media heavyweight CBS Corp.

CBS, -0.20%

 and packed-foods juggernautKraft Heinz Co.

KHC, -4.31%

also posted results late Wednesday, serving up earnings that topped forecasts, but investors weren’t convinced, sending shares lower. CBS shares declined 0.1%, while Kraft shares dropped 4.4%.

Cable company Charter Communications Inc.

CHTR, -0.62%

 reported fourth quarter earnings that were better than Wall Street expected. Shares were up slightly.

Wendy’s Co.

WEN, -2.86%

shares dropped 3.2% after the firm reported declining earnings and sales in the fourth quarter as the company shed company-operated stores in favor of franchise-operated restaurants.

Dean Foods Co.

DF, -8.46%

 slumped 8% after the food and milk processing company missed fourth-quarter profit expectations and provided a downbeat outlook.

MGM Resorts International

MGM, -8.72%

 shares fell 8.8% after the company reported earnings for the fourth quarter, in which profit missed expectations.

Stericycle Inc.

SRCL, +7.66%

 shares rallied 8.3% after the medical waste disposal company’s quarterly results topped Wall Street estimates.

TripAdvisor Inc.

TRIP, -9.64%

 shares dropped 9.2% after the travel website’s quarterly results fell short of analysts’s targets.

Economic news: Strong economic data on Thursday follows a trio of better-than-expected releases on Wednesday. Weekly jobless claims rose by 5,000 to 239,000, but they remained at exceedingly low levels that reflect the resilience of a nearly eight-year-old economic recovery.

In the housing market, construction on new houses fell 2.6% in January, but another increase in permits points to builders breaking ground on more units in the months ahead.

The Philadelphia Fed said its manufacturing index soared in February to a reading of 43.3 from 23.6 in January. That is the highest level since early 1984.

—Victor Reklaitis in London contributed to this report.

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