Stocks End Mixed for Third Day, Longest Such Streak Since 2009

Once again, the major index decided to head in opposite directions, though, once again, the size of the moves were limited.

Biswaranjan Rout/Associated Press

The S&P 500 rose 0.1% to 1,844.86, while the Dow Jones Industrial Average fell 0.3% to 16,373.34. The Dow was dragged down by International Business Machines (IBM) and Caterpillar (CAT), while the S&P 500 got a lift from Textron (TXT), Best Buy (BBY) and Norfolk Southern (NSC).

It was the third consecutive day when the Dow and S&P 500 finished mixed, the longest such streak since a three-day streak that ended July 9, 2009. (Here’s more on why the Dow and S&P 500 are diverging a bit more these days.)

Still, there’s not enough happening to make bears or bulls change their theses on the stock market: No major data releases; No Fed speakers to spook investors before next week’s meeting, where its expected to further cut its bond purchases; and even China took steps to prevent its financial system from blowing up.

And even mediocre earnings can’t seem to push stocks down. S&P Capital IQ’s Alec Young explains:

On the heels of 2013′s strong rally, U.S. equities are hesitating early in the new year with both large- and small-cap stocks flirting with the unchanged mark on a YTD basis. Given last year’s big rally and a lackluster start to Q4 EPS season, we believe stocks’ resilience is impressive. With valuations having normalized as macro risks from Europe to China receded in 2013, we see fundamentals taking the reins from P/E expansion as the primary driver of equity capital appreciation in 2014. On that front, we expect modestly faster EPS growth driven by accelerating economies both at home and abroad to fuel a high single-digit total return for the S&P 500. That said, the specter of Fed policy tightening will likely fuel increased volatility as 2014 progresses.

Ned Davis Research’s Will Geisdorf and Steve Sellers recommend going with the hot hand when choosing which countries to invest in:

At this stage in the cycle, it benefits to befriend the trend…Historically, momentum strategies outperform value strategies in the late stages of a bull market. If continued tapering weighs on global equities this summer, there may be an opportunity to go bargain hunting. However, we caution against starting your shopping spree too early.

International Business Machines dropped 3.3% to $182.25 after reporting weaker-than-expected earnings yesterday after the close, while Caterpillar fell 1.1% to $89.64. Textron  rose 5.3% after offering middling guidance but hope for the business-jet market.  Best Buy gained 6.3% a day after selling its cloud computing business, while Norfolk Southern advanced 4.8% after beating earnings.