Stocks End the Day Near the Flat Line - TheStreet

Stocks End the Day Near the Flat Line

Oil reaches a new record high and consumer confidence takes yet another slide. The major indices recovered somewhat from their lows, ending Friday mixed.
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Updated from 3:08 p.m. EDT

Blue-chip stocks in the U.S. finished the week out little changed, though tech shares remained a bit under the weather, as investors once again showed resilience in the face of soaring oil prices and dismal economic data.

The

Dow Jones Industrial Average

, down nearly 100 points earlier, was closed off just 6 points, or 0.1%, at 12,987. The

S&P 500

turned positive in the final hour, rising 2 points, or 0.1%, to finish at 1425. The

Nasdaq Composite

ended down 5 points, or 0.2%, to 2529.

Earlier, equity measures were dragged considerably lower after the University of Michigan's preliminary May consumer confidence index eased nearly another 3 points to a 28-year low of 59.5, reflecting worsening sentiment on both current and future economic conditions. That's well under economist projections for a dip to 62.

Though the report reflects economic deterioration that has already occurred, it still tends to be a closely watched gauge on the health of U.S. consumers, who over the past few months have been buffeted by the housing crisis, spiking gas prices and an uncertain jobs environment.

"It's clear the housing prices, rising food prices and energy prices are the big things that are weighing on consumers' minds now," said Nigel Gault, chief U.S. economist with Global Insight. "But I have to say, as of right now, the sort of numbers we've seen on consumer spending haven't been anywhere near as bad as you might have expected, given where sentiment numbers are going."

Still, retail stocks took a tumble on the news. The S&P Retail Index dropped 1.8% as the Dow Jones U.S. Retail Index lost 1.2%.

Another key story was the

data on housing starts

, which surprisingly jumped in April. The Commerce Department said the number of homes on which construction began last month climbed to an annualized rate of 1.032 million from an upwardly revised reading of 954,000 in the prior month. Economists were looking for a drop to 940,000.

"The main reason forecasters missed the April figure was a big increase in starts for multifamily homes," wrote Tony Crescenzi, chief bond market strategist with Miller Tabak and a contributor to

RealMoney.com

, a sister site to

TheStreet.com

. He pointed out that this figure is normally a volatile one.

Gault said the volatility of that number renders the report a false uptick. "Don't read much into that," he said. "It's still doubtful we're at the bottom."

Crescenzi added that, excluding January 1991, single-family home starts were at their lowest level since 1982. "This is good news, as it will help to clear the massive overhang of unsold homes by limiting the amount of new homes put into the housing stock," he said.

Also, the number of building permits issued rose by 46,000 in April to 978,000, compared with consensus estimate for a drop to 912,000 permits.

The other big news was taking place in the oil market, where

crude oil reached $127.82 a barrel

, its highest level ever. Recently, crude was surging $2.23 to $126.35. As usual, the AAA reported another all-time high for gas prices at the pump, as the nationwide average hit $3.787.

Most shares in the energy complex were strengthening, including

Exxon Mobil

(XOM) - Get Report

,

Chevron

(CVX) - Get Report

and

Transocean

(RIG) - Get Report

.

Gold futures were up $19 to $899 an ounce. The U.S. dollar slid by 0.8% against the euro to $1.5578 while dropping 0.6% against the yen to fetch 104.05.

On the corporate side,

Kohl's

(KSS) - Get Report

slipped 4% after the department-store chain knocked down its 2008 profit guidance to between $2.95 and $3.15 a share. The company's first-quarter profit dropped 26.8%, though it did top analysts' pessimistic expectations.

Nordstrom

(JWN) - Get Report

, however, gained ground on its own earnings beat, even as its bottom line shrank by 24%. The specialty retailer also whittled down its full-year outlook. Shares were adding 2%.

Abercrombie & Fitch

(ANF) - Get Report

said its first-quarter profit came in higher than last year and bested the consensus target. Still, shares were trading just under the flat line.

Away from retail,

Autodesk

(ADSK) - Get Report

came in ahead of projections as the design-software firm saw its first-quarter income rise 14% from the prior year. Still, the stock erased early gains to lose 0.5%.

Compuware

(CPWR)

posted a

lower first-quarter profit

of $61.2 million, or 23 cents a share. That tops the Thomson Reuters estimate by 2 cents a share. Shares started out lower before hiking up 4.9%.

Treasury prices were reversing early gains. The 10-year note was off 6/32 in price to yield 3.84% and the 30-year bond slumped 9/32 in price, yielding 4.57%.

The prices of Treasury securities have been in determined retreat since March, when panic over the credit crisis reached a hilt amidst the

near-collapse

of

Bear Stearns

(BSC)

, and investors embarked on what Morgan Stanley analyst George Gonclaves called a "major flight to quality."

In a research note, Gonclaves pointed out that investors bagged a net total of $55 billion in bonds that month, nearly tripling the February amount, driving up prices and yanking yields sharply lower. "But after this demand was satisfied and we moved pasted the cathartic moments of March," he said, "yields could only go one way -- higher."

Meanwhile, the United Nations said in its mid-2008 report that "the world economy is teetering on the brink of a severe global economic downturn" spawned by the U.S. credit crisis, the dollar's long fall, spiking oil and food prices, and "persisting global imbalances." The U.N. predicted that global growth will pull back sharply this year, to 1.8% from last year's 3.8%, and pegged a recovery only to 2.1% in 2009.

Overseas markets were mainly rising. The Nikkei 225 in Tokyo lost 0.2% overnight, but the Hang Seng Index in Hong Kong rose 0.4%. As for Europe, the FTSE 100 climbed 0.8% and Germany's Xetra Dax jumped 1.1%. The Paris Cac was higher by 0.4%.