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Stocks Eke Out Positive Finish

Stocks finished higher Friday after retail sales unexpectedly fell 1.2%, the largest drop in eight months, though helped by an improving consumer sentiment report.
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NEW YORK (

TheStreet

) -- After struggling amid clashing economic reports showing disappointing

May retail sales and improving consumer sentiment on the other, stocks drifted higher in the final half-hour of trading to finish with gains.

The

Dow Jones Industrial Average

closed 39 points higher, or 0.4%, at 10,211. The

S&P 500

gained 5 points, or 0.4%, at 1092, and the

Nasdaq

added 25 points, or 1.1%, at 2244.

And despite volatile moves, the three major averages finished the week higher, led by a 2.8% gain on the Dow. The S&P tracked up 2.5%, while the Nasdaq captured another 1.1% since last Friday's close.

"I think the negative news out on retail sales obviously dampened market enthusiasm, but the University of Michigan actually showed consumer sentiment has improved grossly, so you have two conflicting reports," said Peter Cardillo, chief market economist at Avalon Partners. "I guess if you really analyze retail sales and look at some of the components, it's not as bad as perhaps it looks. And I don't think one month constitutes a trend.

"The bottom line: Consumers are feeling better," he added. "But markets were up yesterday, and today's a Friday, so it's not surprising to see the market acting the way it is."

On Friday, global markets took their cues from the U.S. rally despite a

warning from Japan's new prime minister that Japan could face a financial crisis similar to the one that has seized Greece.

Overseas, Hong Kong's Hang Seng jumped 1.2%, and Japan's Nikkei gained 1.7%. The FTSE in London climbed 0.6% higher, while the DAX in Frankfurt fell behind by 0.1%.

The Economy

The Commerce Department reported a surprise 1.2% decline in May retail sales. Excluding autos, sales fell 1.1%. Economists had been expecting growth of 0.2% and a dip of 0.2%, excluding autos.

The University of Michigan consumer sentiment index rose higher to register 75.5 in June. Wall Street expectations had called for a lighter reading of 74.5, according to Briefing.com after May's level of 73.6.

The Commerce Department said its business inventory report edged up 0.4% in April, while March's increase was revised higher to 0.7% from 0.4%. Economists were looking for growth of 0.5% in April.

Company News

Shares of

Pfizer

(PFE) - Get Report

led all other advancers on the Dow after reporting positive results stemming from a drug to treat irregular heart rhythms. Shares rose 3.7% at $15.46, while shares of drug partner

Bristol-Myers Squibb

(BMY) - Get Report

finished 1.8% higher.

Shares of

Microsoft

(MSFT) - Get Report

and

Boeing

(BA) - Get Report

also outperformed all others on the blue-chip average, but

Procter & Gamble

(PG) - Get Report

,

Home Depot

(HD) - Get Report

and

Coca-Cola

(KO) - Get Report

were the chief laggards on the Dow.

Research In Motion

(RIMM)

and

Motorola

(MOT)

settled a long-running patent infringement lawsuit, giving Motorola an undisclosed lump sum and ongoing royalty payments. RIM improved 39 cents at $59.50. But Motorola turned in one of the better performances on the S&P, adding 4% at $7.11.

Shares of

National Semiconductor

TST Recommends

(NSM)

, which finished with one of the betters performances on the S&P just behind

Anadarko Petroleum

(APC) - Get Report

and

International Paper

(IP) - Get Report

, rose 5% after saying late Thursday that it swung to a profit in the fourth quarter and expects first-quarter sales to rise about 3% to 5% sequentially.

Shares of

Biogen Idec

(BIIB) - Get Report

and

Principal Financial

(PHM) - Get Report

dragged the most on the S&P, declining 4% and 2.3%, respectively.

Shares of

Wendy's Arby's Group

(WEN) - Get Report

jumped 7.1% after Trian Fund Management, the company's largest shareholder, said it received an

oral M&A inquiry.

BP

(BP) - Get Report

is considering delaying or deferring its second-quarter dividend as a result of uproar surrounding the Gulf of Mexico oil spill, according to

The Wall Street Journal

. Separately, scientists working with the federal government are now estimating the amount of oil spilled into the gulf could be double what was previously thought, according to

The Associated Press.

Dell

(DELL) - Get Report

is revising its first-quarter results to account for a possible $100 million settlement related to a long-running SEC fraud investigation.

Late Thursday,

The Wall Street Journal

reported the FBI has begun looking into a possible security breach at

AT&T

(T) - Get Report

which unveiled

e-mail addresses of many early

Apple

(AAPL) - Get Report

iPad users.

Commodities and the Dollar

Crude oil for July delivery settled at $73.78 a barrel after shedding $1.70.

Elsewhere in commodity markets, the August gold contract went ahead by $8, to settle at $1,230.20 an ounce.

The dollar was trading higher against a basket of currencies, with the

dollar index up by almost 0.3%.

Treasuries

The benchmark 10-year Treasury was gaining 24/32, lowering the yield to 3.238%.

The two-year note was adding 4/32, pushing the yield down to 0.738%. The 30-year bond was strengthening 1 13/32, diluting the yield to 4.157%.

--Written by Sung Moss and Melinda Peer in New York

.

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