Stocks End Rocky Week Mixed
Robert Holmes
01/26/07 - 04:58 PM EST
Updated from 4:19 p.m. EST
Wall Street closed mixed Friday as traders waded through the latest data on the economy, another string of corporate earnings and word that a blockbuster merger could be in the works in the financial sector.
The
Dow Jones Industrial Average rebounded from its session lows and finished down 15.54 points, or 0.12%, at 12,487.02. Earlier, the Dow fell by as many as 70 points. The
S&P 500 was off 1.72 points, or 0.12%, at 1422.18.
The Dow faced pressure from losses of 1% or more in
Wal-Mart (WMT Quote),
AT&T (T Quote),
Disney (DIS Quote) and
JPMorgan Chase (JPM Quote).
On the plus side, the tech-heavy
Nasdaq Composite overcame early weakness and added 1.25 points, or 0.05%, to 2435.49, benefiting from a 3.9% rise in
KLA-Tencor (KLAC Quote).
All told, the Dow was lower for the week by 78 points. The Nasdaq lost 16 points, and the S&P 500 was off by 8 points. In percentage terms, all three dropped about 0.6%.
Roughly 2.72 billion shares changed hands on the
New York Stock Exchange, and volume on the Nasdaq reached nearly 2.06 billion shares. Winners outpaced losers 3 to 2.
After struggling for much of the day because of concerns about the
Federal Reserve's stance on rates, stocks were energized late by speculation that
Bank of America (BAC Quote) and
Countrywide Financial (CFC Quote) are talking about joining forces.
The
Financial Times reported that the discussions were at an early point but could ultimately lead to BofA taking over Countrywide. Shares of Countrywide rose 4.2% to close at $42. BofA was off 0.7% at $52.04.
"The market performed admirably today, given the technical damage the indexes face," said Barry Hyman, equity market strategist with EKN Financial. "The perception of higher interest rates is spooking investors. It's not surprising to see this type of cautious trading ahead of a Fed meeting. If we don't reestablish the uptrend, we could be in trouble next week."
Central bank policymakers meet Tuesday and Wednesday, but no change in the target fed funds rate is expected.
The market was hit early by word that new homes were sold at a faster-than-expected annual pace in December, ending the year at 1.120 million. Analysts were expecting around 1.050 million.
Last month's reading was 4.8% above November's revised rate of 1.069 million, but 11% below the December 2005 pace of 1.259 million, the Census Bureau said.
The fact that stocks lost ground on the strong report -- relative to estimates -- underscores the difficult time investors are having with the current market. On Thursday, a somewhat soft reading on existing-home sales contributed to a selloff in the major averages.
However, home sales weren't the only data point traders had to consider. Before the session began, the government said durable-goods orders rose 3.1% in December, lower than expectations of a 3.5% increase. Excluding transportation, orders were up 2.3%. November's headline number was revised upward to 2.2% from 1.6%.
Yields on Treasuries rose. The 10-year note fell 1/32 in price to yield 4.88%, and the 30-year bond lost 4/32 to yield 4.98%. The dollar was mixed against the world's other major currencies.
"Rising rates are an expression of economic strength, or increasing demand for funds," explained Ken Tower, chief market strategist with CyberTrader. "That's bullish for corporate profits, but counter to the Fed's 'soft landing' scenario."
Earnings were again in the spotlight as the week ended. Following Thursday's close, tech giant and Dow component
Microsoft (MSFT Quote) beat analysts' estimates for earnings and revenue.
The software maker said it earned 26 cents a share on sales of $12.54 billion for the fiscal second quarter, topping forecasts of 23 cents and $12.08 billion. Shares of Microsoft added 15 cents, or 0.5%, to finish at $30.60.
Before the new session got started, fellow Dow component
Caterpillar (CAT Quote) posted fourth-quarter net income of $882 million, or $1.32 a share, higher by 4% from a year ago. Results missed the Thomson First Call average estimate by 2 cents.
However, Caterpillar said it expects full-year revenue for 2007 between $41.5 billion and $43.6 billion, higher than analysts' forecasts. Shares finished higher on the news, rising $1.46, or 2.5%, to $61.09.
Among ratings moves, Citigroup downgraded
Cisco (CSCO Quote) to hold from buy, citing the difficult balance between revenue growth and operating margin expansion. However, Cisco climbed 13 cents, or 0.5%, to $26.35.
Commodities were mixed. Crude oil futures climbed $1.19 to close at $55.42 a barrel, and natural gas gained 27 cents to $7.17 per million British thermal units. Gold was lower by $3.40 at $644.70 an ounce, and silver was off by 11 cents at $13.37 an ounce.
Equities were weaker overseas. London's FTSE was easing 0.7% to 6228, and Frankfurt's Xetra DAX was down 0.4% at 6690. Tokyo's Nikkei dipped 0.2% at 17,422, and Hong Kong's Hang Seng slipped 1.9% to 20,281.
