NEW YORK - Heading into the final stretch of 2006, Wall St could face tougher sledding with the market's Santa Claus rally apparently over.
In the week to Friday, the main indices lost ground as investors locked in some of the hefty gains of the past few months.
A 0.82 per cent loss for the week was registered by the blue-chip Dow Jones Industrial Average, which ended Friday at 12,343.22 after reaching an all-time closing high earlier in the week of 12,471.32.
The Nasdaq composite meanwhile slumped 2.28 per cent for the week to 2401.18.
For 2006, the Dow is holding a gain of 15.17 per cent.
The broad-market Standard and Poor's 500 index has risen 13.02 per cent and the Nasdaq is up 8.88 per cent.
Some investors were rattled by a sharp drop in the Philadelphia Federal Reserve regional manufacturing index, suggesting further cooling in the industrial sector.
Eugene Peroni at Claymore Research believes the stock market is healthy but in a "technically overbought condition" after the strong gains this year.
Paul Nolte at Hinsdale Associates fears a steeper correction in the market than most have been forecasting.
"Judging by the high valuations and stretched corporate margins, at some point the market will once again put a real scare into investors by declining by something more than 10 per cent, putting sanity back into the markets."
- AFP
