Nasdaq Notches Gains

The Dow takes a last-minute dip into the red, and the S&P tacks on a couple of points. The Nasdaq emerges the day's winner as tech stocks rise on solid earnings reports.
By Sarina Penn ,

Updated from 4:12 p.m. EDT

New York's major averages went out narrowly mixed Friday as a light news day had blue chips turning in a wishy-washy performance and positive earnings news from the tech sector gave legs to the

Nasdaq Composite

.

The

Dow Jones Industrial Average

batted about in mostly positive territory before taking a last-minute dip into the red, ending down 7.90 points, or 0.06%, at 12,638.32. The

S&P 500

finished up 2.12 points, or 0.15%, to 1400.38, and the Nasdaq climbed 14.34 points, or 0.57%, to 2522.66.

"I don't know that a lot of players want to make big moves ahead of next week's reports," said Jim Paulsen, chief investment strategist with Wells Capital Management. "Today's reports weren't too exciting."

The Real Story Wrap: May 30

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Monday will see the release of nationwide manufacturing data from the Institute for Supply Management, and the week is due to end off with the Labor Department's all-important monthly employment numbers.

"That will be the one that will set the tone," said James Bianco, president of Bianco Research. "Payrolls will be important because they will give us the numbers for May, the middle of the second quarter, and give us a little bit better of an idea as far as how second-quarter

gross domestic product is shaping up, to answer the age-old question: Are we in a recession?"

Volume was light to end this holiday-shortened week, with some 1.89 billion shares trading on the

New York Stock Exchange

and the Nasdaq seeing roughly 2.14 billion shares change hands. Advancing issues topped losers by roughly a 5-to-4 margin.

Over the past four days, the Dow has jumped 1.3%, the S&P has spiked 1.8%, and the Nasdaq has surged 3.2%.

"Every market move is a function of what came before it," said Bianco. "Last week we had a 500-point decline, so we started the week in an oversold position. So the rally this week shouldn't have been that surprising."

He added, however, that stocks have only retraced about one-third of last week's losses, meaning that it's still unclear whether or not the major averages have actually changed course. "This could still be a part of the downward trend," he said.

As for monthly action, the Dow never fully recovered from last week's big oil-spurred pullback, and ended down 1.4% for the month. But the broader indices -- the S&P and the Nasdaq -- jumped 1.2% and 4.5%, respectively, for May.

Paulsen believes the high oil prices are still substantially affecting moves in equities, even though futures were up less than 1% for the day, settling up 73 cents to $127.35 a barrel. At the same time, gas prices at the pump bounced by a penny from yesterday to another all-time high, according to AAA, averaging at $3.962 a gallon nationwide. That's a 35-cent hike in the last month alone, and represents nearly a 25% surge from a year ago.

Paulsen pointed out that the market continues to deal with assorted other pressures, as well, as the S&P flirts with the 1400 level and the 10-year Treasury note trades above 4% for the first time this year.

Today the 10-year bond was up 6/32 in price, bringing the yield down to 4.05%. The 30-year note added 18/32 in price, yielding 4.71%.

On the corporate side,

Dell

(DELL) - Get Report

beat expectations on both the top and bottom lines in the most recent quarter, signaling that the computer maker is beginning to

reap the benefits of its turnaround plan

. Earnings totaled $784 million, or 38 cents a share, on sales of $16.07 billion. Shares jumped 5.7%.

Staying in tech,

Marvell Technology

(MRVL) - Get Report

shares surged 23.3% after the chipmaker swung to a fiscal first-quarter profit and brought in enough revenue to

exceed its own guidance

as well as the average analyst estimate. JPMorgan and Oppenheimer each upped the stock to buy-equivalent ratings.

Also swinging to a profit was software concern

Novell

(NOVL)

, which furthermore

outran revenue estimates

and reaffirmed its full-year sales guidance of $940 million to $970 million. The stock added 5.5%.

Elsewhere, jewelry seller

Tiffany

(TIF) - Get Report

padded its full-year earnings outlook and

surpassed targets

for the most recent quarter with a better profit than last year. Shares were up 2.7%.

But

J. Crew

(JCG)

was a big loser, tanking 20.6% after the clothes retailer shaved its full-year profit guidance, having ratcheted down its expectations for same-store sales growth -- those from stores open a year or more. Earnings leaped some 24% in the fiscal first quarter, but Citigroup and Wachovia each downgraded the stock, and Oppenheimer lowered its price target.

Away from earnings, the CEOs of United Airlines and

U.S. Airways

(LCC)

confirmed, in messages to their employees, that they are suspending merger talks. News broke earlier this week that the talks appeared to be breaking down. United operator

UAL Corp.

(UAUA)

gained 1.8%, and U.S. Airways shares sank 8.3%.

As for the day's economic data,, the Commerce Department reported that personal spending and personal income growth each rose 0.2% in April from the prior month, essentially what economists had expected. The March income figure was revised upward by one-tenth of a percentage point. Core personal consumption expenditures also matched expectations last month, ticking up 0.1% compared with 0.2% in March.

Tony Crescenzi, chief bond market strategist with Miller Tabak and contributor to

RealMoney.com

, a sister site to

TheStreet.com

, wrote that these data "indicate sluggishness in the U.S. economy, although perhaps not as much as feared. The inflation news accompanying the report will be taken positively in light of recent inflation worries."

He added that incomes are doing better now than in the 2001 recession, which saw growth of only a 2.9% in its fourth month, and 2.5% in the fifth.

Meanwhile, the Chicago purchasing managers' index put Midwest factory activity at 49.1, indicating a slight contraction from the break-even level of 50, but improving a bit from 48.3 in April. Economists were looking for 48.5.

Also, the University of Michigan nudged its May consumer-confidence numbers marginally higher to 59.8. Still, that was nearly a three-point decline from April.

Back in commodities, gold futures were up $9.80 to $891.50 a barrel. The U.S. dollar weakened by 0.3% against the euro to $1.5553 and dipped 0.1% against the yen at 105.42.

In notable analyst actions, Friedman Billings brought

AnnTaylor's

(ANN)

rating up to outperform from market perform, after which shares climbed 1%. Shares of

Nasdaq OMX

I:IXIC

rose 1.8% on a Lehman Brothers upgrade to overweight.

Piper Jaffray stamped a buy rating on

Big Lots

(BIG) - Get Report

a day after the discount retailer boosted its earnings outlook, but the analyst cut

Costco

(COST) - Get Report

to neutral from buy. Costco beat analyst estimates with its own earnings report yesterday but also said it might not be able to meet current-quarter targets.

Big Lots was up 1.3% as Costco sank 2.3%.

Overseas, the Nikkei 225 in Tokyo soared 1.5% overnight, and Hong Kong's Hang Seng Index gained 0.6%. In Europe, London's FTSE 100 was off 0.2%, but Germany's Xetra Dax rose 0.6%. The Paris Cac moved up 0.8%.

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