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Business News/ Opinion / Online-views/  Material world lifts stocks; Dow, S&P off for 4th week
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Material world lifts stocks; Dow, S&P off for 4th week

Material world lifts stocks; Dow, S&P off for 4th week

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New York: The Dow and S&P 500 closed out their fourth week of losses with a small gain on Friday, but only with the help of a weaker dollar boosting metals prices and basic materials stocks.

Thin trading made for a lackluster day on Wall Street, with desks short-staffed before the Memorial Day holiday that will keep US markets closed on Monday. Volume was the second lightest so far this year.

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The greenback fell broadly after weaker-than-expected US consumer spending and housing data stoked worries that the economic recovery is losing momentum. The US Dollar Index fell 1%, its largest drop since 13 January.

Freeport-McMoRan Copper & Gold Inc rose 2.7% to $51.73. The S&P materials sector index added 1.03% as the dollar’s decline helped lift the prices of metals and other commodities. The Reuters-Jefferies CRB index was headed for a third straight week of gains.

The inverse correlation of the dollar to equities “seems to be a trend that you can focus on as an investor for the time being," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

“The logic is that a weaker dollar helps increase exports, sales and profits for multinational companies in the United States."

The Dow Jones industrial average added 38.82 points, or 0.31%, to 12,441.58. The Standard & Poor’s 500 Index rose 5.41 points, or 0.41%, to 1,331.10. The Nasdaq Composite Index gained 13.94 points, or 0.50%, to 2,796.86.

For the week, the Dow lost 0.56%, the S&P shed 0.16% and the Nasdaq dropped 0.23%.

It was the fourth straight week of losses for both the Dow and the S&P 500. For the Nasdaq, it was the third decline in the last four weeks.

About 5.44 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, the second-lowest trading volume so far in 2011 by a thin margin. It fell way below last year’s estimated daily average of 8.47 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of nearly 3 to 1, while on the Nasdaq, nearly two stocks rose for every one that fell.

Bank stocks led gains in Europe and also boosted the US market. Bank of America, which had the heaviest turnover on the New York Stock Exchange, rose 2% to $11.69. It was the Dow’s biggest percentage gainer.

Medco Health Solutions Inc will lose a major pharmacy benefit contract to CVS Caremark Corp starting next year, a setback that drove its shares down 9% to $58.66. CVS shares rose 1.7% to $38.80.

On the macroeconomic front, separate reports showed the US economy remained sluggish early in the second quarter with high gasoline prices crimping consumer spending and bad weather helping to push home resales to a seven-month low in April.

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Published: 28 May 2011, 12:41 PM IST
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