Dow Misses 13,000 Amid Weak Volume

NEW YORK (TheStreet) -- Stocks finished near the flat line Friday with the Dow Jones Industrial Average again failing to close above 13,000 after breaking the level several times during intraday trading this week.

The blue-chip index fell 1.7 points, or 0.01%, to close at 12,983. The S&P 500 rose 2.3 points, or 0.2%, to settle at 1366. The Nasdaq advanced 6.8 points, or 0.2%, to finish at 2964.

Encouraging economic news helped stocks rise earlier in the session, but buying momentum quickly faded by mid-afternoon. The New York Stock Exchange saw 3.3 billion shares change hands, while the Nasdaq volume totaled 3.6 billion.

The mixed close further confirmed that equities may be approaching a pullback. "We see the major indices falling 3% to 5% over the next month, before resuming their uptrend, which we think will take the major averages to new recovery highs by the second half of the second quarter," wrote Mark Arbeter, technical strategist with S&P Capital IQ, in commentary on Friday afternoon.

The final University of Michigan/Thomson Reuters index of consumer sentiment for February came in at 75.3, up a fraction of a point from the prior month to reach its highest level since February 2011. Economists expected a drop in the reading to 73 according to a Thomson Reuters survey. The preliminary read on consumer sentiment in February was 72.5.

"The strong gains in household confidence is quite encouraging," said Millan Mulraine, senior U.S. strategist, TD Securities. "However, we are somewhat concerned about the sustainability of this rebound as higher gasoline prices could play an important role in dampening confidence toward the economy."

Also on Friday, new home sales for January surpassed expectations, according to the Census Bureau. Sales fell 0.9% to a 321,000 annual pace from an upwardly-revised 324,000 rate in December, beating the consensus expectation for sales of 315,000.

"On net, [this is] a slightly firmer than expected report with prices still under pressure," said Ian Lyngen, senior strategist, CRT Capital Group.

Germany's DAX closed up 0.81% while London's FTSE settled down 0.05% after the Office for National Statistics confirmed that the United Kingdom's economy shrank 0.2% in the fourth quarter due to a fall in business investment. Full-year expansion was also downwardly revised to 0.8%. Japan's Nikkei Average settled up 0.54% and Hong Kong's Hang Seng closed up 0.12%.

The euro gained more than $1.34 against the dollar for the first time since Dec. 9 as the markets anticipated more liquidity measures from the European Central Bank in the coming week. The gains in the euro also came amid a seemingly better situation in Greece.

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In corporate news, insurance giant AIG (AIG) reported fourth-quarter net income of $19.8 billion, boosted by a gain of $17.7 billion related to the release of a deferred tax asset valuation allowance. Operating profit in the quarter was 82 cents a share. Analysts were looking for 63 cents. Shares were rising 1.5% to $28.41.

Wireless broadband services provider Clearwire (CLWR) was tumbling 6% to $2.13 on news that Google (GOOG) plans to begin selling its stake in the unprofitable company on around Feb. 27 at $1.60 a share. Google shares were up 0.6% to $609.90.

J.C. Penney (JCP), the department store giant, said that it lost $87 million, or $0.41 a share, in fourth quarter profits, compared to a gain of $271 million a year earlier. Adjusted income fell to $45 million, or $0.21 a share. Analysts on average were looking for earnings of 68 cents a share on revenue of $5.5 billion. The retailer has jumped by $1.4 billion in value after new CEO Ron Johnson outlined a turnaround plan that kicked off on Feb. 1. Shares were down 0.5% to $41.72.

Salesforce.com (CRM), the cloud computing company, topped Wall Street's fourth-quarter earnings expectations. For the three months ended Jan. 31, the company reported adjusted earnings of $61.6 million, or 43 cents a share, on revenue of $632 million. Analysts were expecting profit of 40 cents a share on revenue of $624 million. Salesforce.com forecast non-GAAP earnings for the current fiscal year of $1.58 to $1.62 a share on revenue of $2.92 billion to $2.95 billion. Analysts polled by Thomson Reuters see profit of $1.62 a share on revenue of $2.91 billion. Shares were surged 9% to $143.64.

Bank of America (BAC) said it would stop selling new home loans to Fannie Mae. The announcement Thursday highlights a long legal battle over how many defaulted mortgages Bank of America should buy back from Fannie in the aftermath of the housing bubble burst. Bank of America has said it will turn to Freddie Mac or Ginnie Mae to back up its mortgages and that the recent decision would not affect its customers. The move, however, is huge given that Bank of America sold almost $38 billion in mortgages to Fannie last year. Shares of Bank of America fell 1.8% to $7.88.

Private equity firm Apollo Global (APO) is said to be near a deal to buy El Paso's (EP) oil-exploration business for about $7 billion, according to the Wall Street Journal. The agreement, which includes Riverstone Holdings, an energy-focused private equity group, may be signed by Friday. The oil and gas industry has been a handful of deals in the past year. Kinder Morgan announced that it would sell El Paso's oil exploration unit after acquiring the whole company for $21 billion last year. El Paso shares rose 1.5% to $27.16 while Apollo Global was ahead by 1.6% to $14.15.

April oil futures settled $1.94 higher to $109.77 a barrel amid fresh hopes for a global economic recovery and risks of tighter sanctions against oil exporter Iran. In other commodities, April gold futures fell $9.90 to $1776.40.

The dollar index was down 0.4% at $78.34. The benchmark 10-year Treasury was up 5/32, diluting the yield to 1.984%.

--Written by Chao Deng and Andrea Tse in New York.



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