Stocks flat as investors book profits after rally

By Ryan Vlastelica

NEW YORK (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) were little changed on Friday as investors booked profits after a week-long rally, offsetting gains from stronger-than-expected jobs data.

The rally to two-year highs arose in part from the Federal Reserve’s decision, announced on Wednesday, to buy $600 billion in government bonds over coming months to boost the economy.

Republican gains in Tuesday’s election, signaling the possibility of a more business-friendly Congress, also lifted market sentiment.

The S&P 500 is up 3.2 percent this week and has risen about 16 percent since September, but investors began to question how long the upward trend could continue without a breather.

“We’ve been up so much lately that people are just looking to take profits right now,” said Joseph Greco, managing director at Meridian Equity Partners in New York. “These levels could be a cap to the recent run-up.”

The Dow Jones industrial average (.DJI: ) dropped 30.54 points, or 0.27 percent, to 11,404.30. The Standard & Poor’s 500 (.SPX: ) gained 0.96 points, or 0.08 percent, to 1,222.02. The Nasdaq Composite (.IXIC: ) dipped 4.36 points, or 0.17 percent, to 2,572.98.

In a technical barrier, the slide of 61.8 percent in the S&P 500 from the historic highs in 2007 to the lows in March 2009 is 1,228.74, near Friday’s session high of 1,227.08.

A government jobs report suggested the sluggish recovery could be picking up steam. Non-farm payrolls rose a solid 151,000 in October, the first gain since May and more than double economists’ expectations.

The employment gains bode well for consumer spending during the holiday shopping period.

Many retailers posted stronger-than-expected sales on Thursday when the Dow and S&P 500 hit their highest levels since September 2008 and the Nasdaq rose to its highest since January 2008.

“As much as the Fed and jobs number help (the markets: ), what we really want to see is people feeling better, and that’ll come through in continued strong retail numbers,” Greco said.

Kraft Foods Inc (KFT.N: ) was the biggest percentage loser on the Dow, falling 2.8 percent to $30.90 a day after it reported third-quarter revenue that was weaker than expected and commented on its 2011 forecast.

The S&P telecommunications (.GSPL: ) and healthcare sectors (.GSPA: ) led the downdraft, with losses of 1 percent and 0.9 percent, respectively.

Financials substantially outperformed other sectors, with the S&P financial index (.GSPF: ) advancing 1.8 percent. The Fed is expected to soon allow some healthy banks to increase dividend payments, people familiar with the decision said late Thursday.

JPMorgan Chase & Co (JPM.N: ) and Bank of America (BAC.N: ) were the top two percentage gainers on the Dow. JPMorgan gained 3.4 percent to $41.15 while BofA shot up 3.5 percent to $12.55.

(Reporting by Ryan Vlastelica; Editing by Kenneth Barry)

Stocks flat as investors book profits after rally