Updated from 4:16 p.m. EDT
Stocks closed a rough week with more losses Friday as traders couldn't shake persistent worries about inflation and an economic slowdown.
After having been up almost 40 points earlier, the
Dow Jones Industrial Average
ended down 46.90 points, or 0.43%, to 10,891.92. The
fell 5.63 points, or 0.45%, to 1252.30, and the
was off 10.26 points, or 0.48%, to 2135.06.
For the week, the Dow lost 356 points, or 3.2%, and the S&P 500 gave up 36 points, or 2.8%. The Nasdaq fell the hardest, losing 84 points, or 3.8%.
"We're walking the fine line between a strong economic slowdown and an accelerating inflation scenario," said Paul Mendolsohn, chief investment officer with Windham Financial. "History indicates that a market weakens into the end of a rate-tightening campaign. We could end up retracing back to our October levels before the market broke out.
"There's a buyers' strike, so this low-volume environment will create more volatility heading into the summer months."
The 10-year Treasury note was up 6/32 in price to yield 4.97%, leaving it inverted against the two-year, which was unchanged in price and yielding 5%. An inverted curve is often interpreted as auguring a recession, but by no means does it always come to pass. Earlier this year, the curve inverted for a few weeks and then returned to normal. In the currency markets, the dollar rose against the yen and the euro.
John Canavan, market analyst with Stone & McCarthy Research Associates, said he wasn't reading too much into the current shape of the yield curve. "We're not near anywhere the inversion we saw in February," he said. "It remains to be seen if it'll amount to anything."
He said he doesn't see a major connection between equities and the curve. "The equity market has been so weak and so volatile that it's more of the same," Canavan said. However, there is a slight suggestion that the curve is indicating a potential economic slowdown, he said.
To view Gregg Greenberg's video take on today's market, click here
The Dow was dragged lower by losses of 1.5% or more in
However, those losses were tempered by gains in
, up 0.9% and 2.1%, respectively.
The Nasdaq, meanwhile, was pressured by a decline in
, which late Thursday predicted it will earn 46 cents to 48 cents a share on revenue of $3.63 billion to $3.78 billion in its second quarter. Its previous estimate was for earnings of 38 cents to 43 cents a share on sales of $3.46 billion to $3.75 billion. Part of the upside is attributable to a patent settlement and tax gain. Still, Texas Instruments lost 86 cents, or 2.8%, to close at $29.86.
About 1.60 billion shares changed hands on the
New York Stock Exchange
, with decliners outpacing advancers by a 6-to-5 margin. Volume on the Nasdaq was 1.78 billion shares, with decliners beating advancers 3 to 2.
On the economic front, the Commerce Department said the U.S. trade deficit widened to $63.4 billion in April from $62 billion in March. Economists had expected a reading of about $65 billion.
"The better-than-expected deficit number falls in line with growth we expected in the second quarter," said Peter Cardillo, chief market strategist with S.W. Bach & Co. "The dollar is stronger behind this, which is another supporting factor for us."
Elsewhere, the Labor Department said import prices rose 1.6% in May due to increasing energy costs. Economists were expecting import prices to rise 0.8%. Excluding the rise in petroleum costs, import prices were up 0.6%.
On Thursday, stocks closed narrowly mixed as bulls stepped in and erased steep losses in the last two hours of trading. For the second time in less than a month, the major indices bounced after the S&P 500 fell to its lowest point of 2006, which is now 1235.
Thursday's rebound featured big swings in many energy and materials stocks, where weakness has prevailed for nearly a month, pacing the broader market's decline. On Friday, analysts at SunTrust began coverage on a handful of energy names, slapping buys on
( XTO), among others.
was upgraded to neutral by Prudential.
Prudential also raised its rating on the chip sector to favorable from unfavorable. The firm raised
to neutral from underweight.
Crude, which has fallen in three consecutive sessions after touching a three-week high of $72.60 a barrel Monday, firmed. The July contract added $1.28 to close at $71.63 a barrel in Nymex floor trading. Among other commodities, gold fell $1 to $612.80 an ounce, and copper lost 9 cents to $3.28 a pound. For the week, the gold contract lost 4.4%.
Even with oil's advance, the Philadelphia Oil Service Sector index closed down 0.8% and the Amex Oil index fell 0.7%. In other sectors, the Philadelphia Housing Sector index was adding 0.7%, while both the Philadelphia Semiconductor Sector index and the S&P Retail index finished the session down 0.6%.
slid 17.5% after saying its second-quarter loss widened by a factor of five despite a 19% rise in sales. The video-game publisher declined to give forward guidance. Shares closed down $2.94 to $13.83.
fourth-quarter earnings fell 9% from a year ago to $118.8 million, or 34 cents a share, due in part to a charge. Adjusted for that, earnings of 41 cents a share were 3 cents ahead of estimates. National Semiconductor was higher by 58 cents, or 2.4%, to $24.49.
In a midquarter update,
backed previous guidance for a 1% to 5% sequential rise in sales but warned that its gross margin will be 62% in the current period, not the 62.5% it previously predicted. Shares fell 65 cents, or 2.5%, to $24.96.
backed previous guidance for its second quarter, saying it expects to earn about 31 cents a share on revenue of $7.25 billion. "Demand is generally stable throughout the world," the company said. "As expected, we are experiencing margin pressure from a more competitive environment, especially in Europe, but we are managing through it well." Ingram Micro gave up a penny to finish at $16.80.
fell after a
New York Times
report that some European government agencies are launching a legal attack against the company. The countries want Apple to allow users of the iTunes Music Store to play downloaded music files on devices made by companies other than Apple. Shares dropped $1.52, or 2.5%, to $59.24.
Among ratings moves, Bear Stearns raised its rating on
to outperform from peer perform, citing increased earnings expectations thanks to weakness in the dollar and improved performance in overseas markets. The firm also upped its stock price target to $48. Coca-Cola tacked on 16 cents, or 0.4%, to $43.55.
Overseas markets were higher, with London's FTSE 100 adding 1.7% to 5655 and Germany's Xetra DAX rising 1.5% to 5464. In Asia, Japan's Nikkei gained 0.8% overnight to 14,751, while Hong Kong's Hang Seng gained 1.2% to 15,629.