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Stocks Crawl Into the Weekend as More Earnings Loom

NEW YORK (TheStreet) -- Stocks barely made any moves Friday as investors waited for corporate earnings to crank up next week.

The Dow Jones Industrial Average managed to post its sixth consecutive winning session, the longest all year, but not without effort. 

The S&P 500 was up 0.08%, the Dow added 0.21%, and the Nasdaq rose 0.41%.

It's a full docket on the earnings calendar next week. Johnson & Johnson (JNJ - Get Report) , eBay (EBAY - Get Report) , Intel (INTC - Get Report) and JPMorgan (JPM - Get Report) will report on Tuesday; Bank of America (BAC - Get Report) , Delta (DAL) , Wells Fargo (WFC) , and Netflix (NFLX) are due on Wednesday; Citigroup (C) , Goldman Sachs (GS) , and Mattel (MAT) will report on Thursday; and General Electric (GE) will round out the week on Friday. 

Expectations for corporate earnings in the third quarter are low. Third-quarter earnings are expected to decline 4.2% from a year earlier, according to Thomson Reuters. Similar issues that plagued the second quarter such as a stronger U.S. dollar and lower energy prices are expected to carry over into this past quarter.

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Alcoa (AA) unofficially kicked off the third-quarter earnings season on Thursday afternoon. Shares fell 6.8% after profit and sales missed estimates in its second quarter. Net income of 7 cents a share was half what analysts had expected, while revenue tumbled nearly 11% to $5.57 billion. The company has suffered from a sharp drop in the price of commodities.

Alcoa also said that it expects global aluminum demand to increase 6.5% this year, though warned that Chinese demand was slowing faster than projected. The metals company reduced automotive demand in the country to 1% to 2% growth, down from 5% to 8%.

Crude oil settled at $49.63 a barrel after briefly topping $50 a barrel for the first time in more than two months on Friday. Prices rallied after a weekly count of oil rigs showed the active total drop by nine to 605. West Texas Intermediate crude was up 9% for the week.

Commodities markets rallied after Glencore (GLCNF) announced it would cut annual zinc production by a third, around 500,000 tonnes, on Friday. Glencore produces around 4% of global supply of zinc. Zinc prices jumped 12%, while gold prices rose 1.1% to $1,157 an ounce and copper climbed 2.8% to $240.95 a pound.

The Fed's rate hike path will most likely be gradual, Chicago Fed President Charles Evans said in a speech on Friday. Evans noted that interest rates could still sit below 1% by the end of 2016, a level that would remain accommodative to markets.

"When thinking about the initial stages of normalization, I find it useful to focus on where I think the federal funds rate ought to be at the end of next year given my economic outlook and assessment of the risks," Evans said in Milwaukee. "Right now, regardless of the exact date for liftoff, I think it could well be appropriate for the funds rate to still be under one percent at the end of 2016."

Stocks rallied on Thursday as sentiment continued to strengthen that the Fed is unlikely to raise interest rates before March. Increased downside risks in September encouraged members to delay a rate hike last month, according to the Fed's meeting minutes. Members said it would be "prudent" to wait until risks eased before tightening monetary policy for the first time in a decade.

"Market reaction, like during the meeting, is overwhelmingly interpreting the minutes as dovish, as an extension of the dovishness," Bill Ehling, fixed income market strategist at Federated Investors, told TheStreet. However, he noted, "the market behavior over the next couple of months is really going to be contingent on the data stream and what we see in the context of the Chinese slowdown."

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BAC $15.58 -1.08%
EBAY $24.30 0.62%
INTC $32.14 -1.17%
JPM $61.93 -0.32%
JNJ $95.37 0.30%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

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