By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks fluctuated between mild
gains and losses on Friday following two bruising days that left
Wall Street on track for a second weekly drop.
"Even after a pullback from the last couple of days, we're still
up year to date, and just like 2012, it coincides with a weakly
growing economy. Two percent economic growth gave us 16% equity
appreciation last year," said Jerry Villella, a J.P. Morgan Private
Bank investment specialist based in Dallas. The S&P 500 has
gained 16% so far this year.
"Earnings-per-share growth is what counts," said Villella,
adding that 3% of that growth is coming from top-line, or sales
growth, none stems from margin expansion and 1% comes from a
shrinkage in outstanding shares due to corporate share
repurchases.
After the worst two days since June, with the most recent
cutting 338.82 points, or 2.2%, off the Dow Jones Industrial
Average (DJI), benchmark indexes on Friday were little changed.
"It's not surprising to see volumes dry up in late August and
moves to be magnified in one direction or another," said
Villella.
While stock indexes traded in a limited range, longer-term
Treasury yields resumed their rapid climb, with the 10-year
(10_YEAR) rising 6 basis points to 2.836%.
"Around lunchtime, the 10-year note got hit and the yield moved
above yesterday's high. If the yield would back off below 2.8%,
stock buyers would be a bit encouraged," Elliot Spar, market
strategist at Stifel Nicolaus & Co., emailed in afternoon
commentary.
Villella said that "real yields are moving up, and that's a
reflection of a healing economy. Steep yield curves do not precede
recessions."
He believes the recent and violent move in yields will moderate,
with the 10-year yield moving between 2.5% and 3% through the end
of the year.
Trading in a 62-point range, the Dow Jones Industrial Average
was lately off 21.70 points, or 0.2%, at 15,090.49, a level that
has it down 2.2% for the week.
Technology led sector gains and telecommunications paced losses
on the S&P 500 index (SPX), which shed 3.78 points, or 0.2%, to
1,657.54, off 2% from last Friday's close.
Down 1.3% this week, the Nasdaq Composite (RIXF) rose 5.51
points, or 0.2%, to 3,611.63.
For every three shares advancing, four fell on the New York
Stock Exchange, where 379 million shares traded by 1:05 p.m.
Eastern. Composite volume topped 1.6 billion.
Gold prices rose $5.60, or 0.4%, to $1,366.50 an ounce,
extending a two-day rally in which it gained $40.40, or 3.1%. Up
for six of its last five sessions, the metal is up 4.1% for the
month and down 19% for the year.
Oil prices fell and the dollar edged higher against the
currencies of major U.S. trading partners.
Economic reports drew little reaction for Wall Street.
The Commerce Department reported housing starts climbed at an
annual rate of 896,000, less than the 915,000 estimated.
"They were a bit weaker than expected, but I still think it's
overall good news, as they approached 900,000. I was disappointed
about single-family starts, which actually declined, and it is a
bit surprising. Based on recent permit data, I was hoping to see
more of an uptick on the single-family side," said Elizabeth
Ptacek, a senior credit real-estate analyst at KeyBank.
But Ptacek believes that difficulty in getting financing is more
of an issue for housing than higher interest rates: "Credit remains
very tight. It's easing, but not quickly enough for first-time home
buyers."
The Labor Department reported productivity rose at a slightly
better-than-estimated 0.9% annual rate in the second quarter. The
initial read of the University of Michigan/Thomson Reuters consumer
sentiment fell to 80.0 this month, down from 85.1 in July,
according to published reports.
Nordstrom Inc. (JWN) shares fell 3.7% a day after the high-end
retailer reported lower-than-expected sales and cut its full-year
forecast.
Aspen Technology Inc. (AZPN) shares jumped 8.9% after the maker
of software for process manufacturing posted higher-than-expected
sales and earnings for the fiscal fourth quarter.
Dell Inc.(DELL) posted adjusted earnings of 25 cents per share
-- a penny higher than analysts had predicted. Shares of the
personal-computer maker were up 0.1%.
Upbeat jobless-claims data on Thursday helped cement the view
that tapering of the Federal Reserve's bond-buying program will
happen in September. U.S. stocks sank for a second day, driven by
tapering fears, downbeat corporate news and a spike in Treasury
yields to 2011 highs.
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