NEW YORK (CNNMoney.com) -- The Nasdaq slid and the broader market churned Wednesday as investors mulled weakness in tech and telecom along with signs of stabilization in the job market and services sector of the economy.
After starting off the new year with a big rally, investors were cautious, with stocks churning in a tight range Tuesday and Wednesday. A stronger dollar and some concerns ahead of Friday's big monthly jobs report have created some hesitation on the part of investors.
Market participants are also likely holding back in the wake of a big 2009, in which the S&P 500 gained 23%, the Dow industrials added 19% and the Nasdaq added 44%.
Despite the early January choppiness, the trend is still up, according to Rob Lutts, chief investment officer at Cabot Money Management. "When the market is strong and you enter into a new year, money is often reallocated and I think you're going to see it move into equities," he said.
Lutts said that despite the stock rally last year, most mutual fund money went into fixed income, rather than stocks, with investors still very cautious after the near financial market meltdown. That caution is also reflected by the more than $3 trillion that is sitting in cash or cash equivalents.
"It's likely that this year there's some pent-up buying that could drive stocks for a few weeks," he said. "Then the earnings start and the results should be pretty strong for the next few quarters."
Jobs: Two private firms released reports on the December labor market, ahead of Friday's big non-farm payrolls report from the government.
Payroll services firm ADP said employers in the private sector cut 84,000 jobs from their payrolls last month, the smallest monthly decline since March 2008. However, economists surveyed by Briefing.com were expecting 75,000 cuts, on average. Employers cut 145,000 jobs in November.
Outplacement firm Challenger, Gray & Christmas reported that 45,094 job cuts were announced in December, down from November's 50,349 figure. December 2009's number was the lowest since December 2007.
On Friday, the government is expected to report no change in non-farm payrolls last month, after employers cut 11,000 in the previous month, according to a Briefing.com survey. The unemployment rate, generated by a separate survey, is expected to show that the unemployment rate rose to 10.1% from 10% in November.
Economy: The Institute for Supply Management's services sector index rose to 50.1 from 48.7 in the previous month. Economists thought it would rise to 50.5, on average. A reading over 50 indicates expansion in the sector.
At around 2:00 p.m. ET, the Federal Reserve released the minutes from its December policy meeting. At that meeting, the bankers opted to continue to hold interest rates at historic lows near zero. The minutes showed the bankers thought that the economy was continuing to strengthen and that downside risks were waning.
On the move: Ford Motor (F, Fortune 500) rallied 3.7% in active New York Stock Exchange trading one day after it reported strong December sales at the end of one of the worst years in memory for the automakers.
On Tuesday, Ford said U.S. sales jumped 34% in December versus a year ago and rose 50% from November. For the year, sales fell 15%. Ford's December sales were better than expected. Toyota (TM) and Honda (HMC) also reported better-than-expected results.
World markets: Asian markets ended higher. In Europe, London's FTSE 100 rose 0.1%, France's CAC 40 rose 0.1% and the German DAX was little changed.
Commodities and the dollar: The dollar fell versus the euro gained against the yen.
COMEX gold for February delivery gained $17.80 to settle at $1,136.50 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.
U.S. light crude oil for February delivery rose $1.41 to settle at $83.18 a barrel on the New York Mercantile Exchange, the highest close since October 2008.
Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.80% from 3.75% late Tuesday. Treasury prices and yields move in opposite directions.
Market breadth was mixed. On the New York Stock Exchange, winners topped losers three to two on volume of 1.11 billion shares. On the Nasdaq, decliners topped advancers by five to four on volume of 2.24 billion shares.
Talkback: With the economy in recovery mode and a new year underway, what's your 2010 plan for your portfolio? Will you invest more, less or not at all? Are you willing to take on more risk? E-mail your story to email@example.com and you could be featured in an upcoming article. For the CNNMoney.com Comment Policy, click here.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.80%||3.88%|
|15 yr fixed||3.20%||3.23%|
|30 yr refi||3.82%||3.93%|
|15 yr refi||3.20%||3.23%|
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