- Title: USA: Dow, S&P pull back from record highs after Icahn's caution
- Date: 18th November 2013
- Summary: WALTHAM, MASSACHUSETTS, UNITED STATES (NOVEMBER 18, 2013) (REUTERS) (SOUNDBITE) (English) BRAD MCMILLAN, CHIEF INVESTMENT OFFICER, COMMONWEALTH FINANCIAL NETWORK, SAYING: "I don't think we are in a bubble yet for a variety of reasons. But what we do see starting to happen is we start to see retail investors switching over from fear to greed. So we have a number of our advisors who have clients who a year ago were saying, 'Keep me out of the stock market' and who are now saying, 'I have to be in the stock market'. That's a sign that the psychology is changing. And because of that.. But because it's just really getting started at the retail level, it is something that is concerning, but I don't think we are quite at the end of the road for that yet. We are not in a bubble, but we are on a road that could lead to one."
- Embargoed: 3rd December 2013 12:00
- Location: Usa
- Country: USA
- Topics: Economy
- Reuters ID: LVA78F05N7IJOLPMVPWDMX90UXRH
- Story Text: The S&P 500 and the Nasdaq ended lower on Monday (November 18) while the Dow failed to close above its milestone level of 16,000 as stocks sold off late in the session following Carl Icahn's cautious comments on the equities market.
The Dow and the S&P 500 retreated from record levels with less than an hour to go in Monday's session. The Nasdaq, which had been down slightly for most of the day, fell 1.1 percent to a session low.
Speaking at the Reuters Global Investment Outlook Summit, Icahn said he is "very cautious" on the stock market, saying he could see a "big drop" because earnings at many companies are fueled more by low borrowing costs rather than the strength of management.
He also hinted at his plan for Apple Inc, the most valuable U.S. stock by market value, saying he does not want to fight with the management of the iPhone maker. He also said he has no plans to walk away from his investment. The stock extended losses following his comments, ending down 1.2 percent at $518.63 (USD) on Monday.
The Nasdaq was hammered by a sell-off in social media and cloud-related stocks, including Facebook, down 6.5 percent at $45.83.
Tesla also extended losses, down more than 10 percent at $121.58. The electric car maker's stock has lost nearly 24 percent for the month so far.
The Dow Jones industrial average <.DJI> rose 14.32 points, or 0.09 percent, to end at 15,976.02. The Standard & Poor's 500 Index <.SPX> slipped 6.65 points, or 0.37 percent, to finish at 1,791.53. The Nasdaq Composite Index <.IXIC> slid 36.90 points, or 0.93 percent, to end at 3,949.07.
The S&P 500 had earlier hit 1,802.33 and the Dow touched 16,030.28, their highest levels ever. On Friday, both closed at record highs to mark their sixth straight week of gains.
Michael Gayed, Chief Investment Strategist for Pension Partners, said the Dow 16,000 could fuel emotional buying.
"Look, it's largely an arbitrary number. The Dow is a price-weighted index and I know it gets a lot of headlines because everyone tracks the Dow. It may at the margin cause more people to pay attention to the U.S. stock market, which at the margin, might increase allocations toward U.S. stocks. But if that's a reason that people are buying the U.S. stock market, presumably those are people that are not necessarily the most financial literate in a lot of ways, if that's the reason why they are buying because the Dow hit some round number."
Brad McMillan, Chief Investment Officer at Commonwealth Financial Network said greed is the emotion behind the recent records.
"What we do see starting to happen is we start to see retail investors switching over from fear to greed. So we have a number of our advisors who have clients who a year ago were saying, 'Keep me out of the stock market' and who are now saying, 'I have to be in the stock market'. That's a sign that the psychology is changing."
About 5.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, slightly below the five-day average closing volume of about 5.8 billion, according to BATS exchange data.
On the New York Stock Exchange, decliners beat advancers by a ratio of nearly 3 to 2. On the Nasdaq, 16 stocks fell for every nine that rose.
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