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Stocks Finish Mixed After GDP Data Disappoints


NEW YORK (TheStreet) -- U.S. stocks finished mixed Friday as good consumer sentiment data failed to distract investors from a disappointing read on gross domestic product.

The Dow Jones Industrial Average slumped 74.2 points, or 0.6%, at 12,660, with Chevron (CVX), the second-largest U.S. energy company, weighing on the index following disappointing quarterly earnings. The energy stock was down over 2%.

The S&P 500 fell 2.1 points, or 0.2%, at 1,316, and the Nasdaq finished in positive territory, up 11.3 points, or 0.4%, at 2,817 with the help of some decent technology earnings.

Breadth was even, with the number of stocks advancing roughly equal to the number of stocks declining on the New York Stock Exchange.

"The market is pulling back on a weaker GDP number notwithstanding improving consumer sentiment," says Peter Cardillo, chief market economist at Rockwell Global Capital. "However, I don't see the decline revising the upward trend, since lower economic growth in this quarter has been factored in."

"Honeywell International (HON) may be lifting the tech sector after slightly beating market expectations," he added.

Stocks edged slightly higher Friday afternoon after Fitch Ratings cut the credit ratings of Italy, Spain, Slovenia, Belgium and Cyprus while maintaining Ireland's rating. Italy and Spain were both cut two notches to A- and AA-, respectively.

Also adding to late-day optimism was a Wall Street Journal report that Facebook may file for an initial public offering as early as Wednesday. The social-networking company is expected to pick Morgan Stanley (MS) as the lead underwriter of the offering that is looking at a valuation of $75 billion to $100 billion, according to the Journal.

The Bureau of Economic Analysis reported early Friday that the total output of goods and services in the U.S. expanded 2.8% during the fourth quarter, which was less than the 3.1% expansion that economists polled by Thomson Reuters were expecting. Much of the increase was driven by positive contributions from private inventory investment. Private inventories added 1.94 percentage points to the fourth-quarter change, with private businesses increasing inventories by $56 billion in the fourth quarter, following a decrease of $2 billion in the third quarter.

In the third-quarter, gross domestic product increased 1.8%.

"The first thought that came to my mind when GDP came in lighter than expected was whether this is what caused the more dovish sounding Fed on Tuesday," said James "Rev Shark" DePorre, founder and CEO of Shark Asset Management. "The issue now is whether hopes of QE3 offset any worries about a slowing economy. If you look at the action in the market since March 2009 the answer has been resounding: don't fight the Fed."

In other economic news, the University of Michigan consumer sentiment index for January came in better-than-expected at 75. Economists had expected the final reading to remain unchanged at 74. The positive data did little to lift market sentiment following the weak GDP report.

Stocks dropped Thursday as disappointing housing numbers and weak jobless data overshadowed strong earnings from a handful of corporate heavyweights.


London's FTSE settled lower by 1.07%, and Germany's DAX finished down 0.43%. In Asia, Japan's Nikkei Average closed lower by 0.09%. Hong Kong's Hang Seng index finished higher by 0.31%.

In corporate news, Chevron slipped 2.5% to $103.96 after the oil giant reported its steepest quarterly earnings decline in two years amid big refining losses. Fourth-quarter earnings fell to $5.1 billion, or $2.58 a share, from $5.3 billion, or $2.64 a share a year ago. That missed the average analyst earnings target of $2.84 a share, according to a Thomson Reuters poll.

Procter & Gamble (PG), the consumer products giant, reported profit for the fiscal second quarter of 57 cents a share and sales of $22.14 billion. Analysts expected it to post earnings of $1.08 a share on revenue of $22.19 billion. Earnings so not include one-time items, including a charge of 50 cents a share for costs related to the appliances and salon professional businesses. Earnings came in 49% below the quarter a year earlier when P&G earned $1.11 a share on revenue of $21.3 billion. Shares were sank 0.8% to $64.30.

Automaker Ford (F) missed estimates but a one-time tax gain helped the company post the biggest profit since 1998 of $20.2 billion for the fourth quarter. Profit came in at 20 cents a share, excluding one-time costs. Analysts forecast 25 cents a share on revenue of $32.35 billion, according to analysts. Overseas businesses pressured profits although it was the third straight quarter that profits rose for Ford. The stock erased 3.6% to $12.28.

Diversified technology and manufacturing giant Honeywell International reported fourth quarter earnings of $1.05 a share, up 21% from the period a year earlier. Sales rose by 8% to $9.5 billion, with the help of new product launches and expansion in high growth regions. Consensus forecast was for $1.04 earnings per share on revenue of $9.56 billion. Honeywell shares advanced 0.8% to $58.27.

Eastman Chemical (EMN) proposed to buy Solutia (SOA) in a deal worth $4.7 billion, including debt. The buyer will pay $27.65 a share for Solutia, which is a 42% to Solutia's closing price on Thursday of $19.51. Eastman shares jumped 7% at $50.41 while Solutia soared 41% to $27.52.

Starbucks' (SBUX) outlook for fiscal 2012 came in short of the consensus view. The Seattle-based coffee seller said it expects earnings of $1.78 to $1.82 a share for the full year, slightly below analysts' expectations for profit of $1.83 a share. The company said it expects "unfavorable" commodity costs to impact results this year with the brunt of the impact coming in the first half of the year. Shares dropped 1% to $47.85.

Juniper Networks (JNPR) reported worse-than-expected fourth-quarter earnings and issued weak first-quarter guidance. Juniper reported fourth-quarter earnings of 28 cents a share on revenue of $1.12 billion. Wall Street analysts expected Juniper to earn 28 cents on $1.126 billion in revenue. Shares lost 3% to $21.69.

First-quarter guidance was weaker than Wall Street analysts were anticipating, as customer spending continues to be sluggish. Juniper expects first-quarter revenue of between $960 million and $990 million and earnings of 11 cents to 14 cents a share. Wall Street analysts expected $1.1 billion in revenue and 26 cents in earnings, according to Yahoo! Finance.

Biotech company Amgen (AMGN) said fourth-quarter profit fell 8.5% as expenses for taxes and for producing and selling drugs rose faster than revenue. Amgen reported net income of $934 million, or $1.08 a share, down from $1.02 billion, or $1.08 a share, a year earlier. On an adjusted basis, Amgen said it earned $1.04 billion, or $1.21 a share; analysts were expecting adjusted profit of $1.22 a share. Revenue rose 3% to $3.97 billion. Analysts expected revenue of $3.92 billion. Shares climbed 0.4% at $68.33.

A federal judge on Thursday ruled that Transocean (RIG)is shielded from paying out certain claims against it stemming from the massive oil spill in the Gulf of Mexico in April 2010 because of its contract with BP (BP). Transocean shares finished up1.8% at $48.13 and BP shares fell 2.4% to $43.70.

March oil futures settled 14 cents lower at $99.56 a barrel, while February gold futures finished $5.50 higher at $1,731.80 an ounce.

The benchmark 10-year Treasury was rising 11/32, diluting the yield to 1.900%, while the U.S. dollar index was edging 0.7% lower at $78.87.

-- Written by Kaitlyn Kiernan and Andrea Tse in New York



>To contact the writer of this article, click here: Andrea Tse or Kaitlyn Kiernan

>To follow the writer on Twitter, go to http://twitter.com/atwtse or @Kaitlyn_Kiernan.

>To submit a news tip, send an email to: tips@thestreet.com.

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