Stocks Fizzle as BlackBerry Slashes Workforce
NEW YORK ( TheStreet) -- Major U.S. stock markets finished Friday's trading session in the red Friday but were able to eke out a third week of gains after the S&P 500 was driven to fresh all-time highs in the middle of week on the Federal Reserve's surprise decision Wednesday to keep its current $85 billion a month bond-buying program in tact. Enthusiasm turned out to be short-lived as investors retreated to the sidelines on a host of uncertainties heading into the coming, data heavy week.
The S&P 500 finished down 0.72% to 1,709.91 for the day but closed 1.3% higher for the week. The Dow Jones Industrial Average settled behind by 1.19% to 15,451.09, finishing up 0.49% for the week. The Nasdaq edged down 0.39% to 3,774.73, concluding the week up 1.41%.
Initial enthusiasm about the Fed's accommodative stance fizzled by the end of the week as investors mulled the situation that drove the Fed to its latest policy decision in the first place: preoccupation about tightening financial conditions and the impact on the economy. Meanwhile the market's risk appetite took another hit after St. Louis Federal President James Bullard said Friday that the central bank could still taper its bond-buying program as early as October. Kansas City Fed President Esther George, who dissented on the Fed's vote Wednesday, later added that the central bank's decision to delay tapering was hurting its credibility. Uncertainties surrounding the budget negotiations in Washington and the Sunday German elections were also adding to the headline risk.
BlackBerry (BBRY) was one of the biggest losers in the equity markets Friday. The stock plunged more than 17% to $8.73 after announcing restructuring plans including the reduction of about 4,500 employees or roughly 40% of the company's global workforce and forecasting a second-quarter net operating loss of about $950 million to $995 million. The firm blames an "increasingly competitive business environment" for its weak BlackBerry smartphone volumes.Rockwell Collins (COL) declined 5.76% to $70 after the aviation and military electronics maker delivered lower-than-expected guidance for fiscal 2014. The company expects revenue between $4.5 billion and $4.6 billion and earnings per share in the range of $4.30 to $4.50 versus analysts' average revenue and earnings estimates of $4.97 billion and $4.83 a share. "Our assumption is that sequestration is here to stay and, in accordance with the Budget Control Act, 2014 represents the bottom for this defense cycle," Rockwell Collins CEO Kelly Ortberg said in statement. Darden Restaurants ( DRI ) plunged more than 7% to $45.78 after the company posted lower than expected first-quarter earnings per share of 53 cents versus the average analyst estimate of 70 cents as revenue fell short of expectations. In the first quarter, U.S. same-restaurant sales increased 3.2% at LongHorn Steakhouse, and declined 4% at Olive Garden and 5.2% at Red Lobster. The benchmark 10-year Treasury rose 6/32, diluting the yield to 2.736%. Follow @atwtse -- Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.>
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