Stocks are mixed after a three-day downturn

The rally that has driven stocks to record highs paused this week as investors try to figure out where things are headed next.

Stocks were mixed on Friday and were headed for their second weekly loss in a row. Indexes reached record highs as recently as Monday, but they've fallen or been mixed every day since then.

How come? Investors may be nervous that stocks are overpriced, that stock prices have grown faster than justified by profits. They may be worried about conflict with Iran, or the debate over federal spending. Some are worried the Federal Reserve will decide next week to reduce its economic stimulus, which has boosted stock prices.

"It's a hiatus," said Frank Fantozzi, CEO of money management firm Planned Financial Services. "I really think there's nothing economically wrong."

Fantozzi noted that other bull markets have run for seven or eight years and peaked with higher prices compared to profits compared to what we're seeing now.

Shortly after midday, the Dow Jones industrial average was up 11 points at 15,750. The Standard & Poor's 500 index was down a half-point at 1,775. The Nasdaq composite rose one point to 4,000.

All three are still down for the week despite strong reports on employment, housing, and retail spending. Investors have been worried that the stronger the Fed thinks the economy is, the more likely it is to stop buying $85 billion per month in bonds. The purchases have been aimed at keeping markets fluid and interest rates low.

The Fed's stimulus has sent investors into stocks as they seek higher returns. The big indexes are up 20 percent or more this year.

The central bank's policymaking committee meets next week and will release a statement on announce any decisions on Wednesday.

Guessing when the stimulus will end has become a parlor game for investors, who are stuck between betting that it will end soon, meaning stocks could decline, versus betting that it will continue, bringing the bull market along with it.

Scott L. Wren, a senior equity strategist at Wells Fargo Advisors, wrote in a note to clients that the jobs and economic growth numbers have not been as strong as some investors believe. Job gains are only slightly above the long-term average. And third-quarter economic growth was driven in large part by companies adding to inventories, not necessarily by customer demand.

"In other words, the shelves are now stocked to the rafters, and the chance of a surge in end-user demand seems low," Wren wrote.

Six out of 10 industry groups in the S&P 500 fell, led by energy and technology stocks. Apple, Google, and Microsoft all fell. Consumer discretionary stocks had the biggest gains.

Software maker Adobe Systems jumped 11 percent after subscription-based revenue rose. Adobe rose $6.05 to $60.04.

Anadarko Petroleum fell $7.21, or almost 9 percent, to $76.46 after a federal bankruptcy judge said it may be liable for between $5 billion and more than $14 billion in a legal battle over the spinoff of a paint materials company. The ruling isn't final.

Markets outside the U.S. were tentative, too. Asia's heavyweight market benchmark, Tokyo's Nikkei 225, rose 0.4 percent. In Europe, indexes in London, France, and Germany had small losses.

Benchmark crude oil fell $1.11 to $96.40 on the New York Mercantile Exchange.

The yield on the 10-year Treasury note fell slightly to 2.87 percent.

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