Lots of Volume, Little Movement for Stocks

Updated from 4:08 p.m. EDT

Blue-chips managed to eke out gains Friday, while other shares lagged behind, as investors speculated about next week's Fed decision on rates.

The Dow Jones Industrial Average finished with a gain of 21.22 points, or 0.2%, at 9200.75, after being up more than 80 points earlier in the day. The Nasdaq lost 3.61 points, or 0.2%, to 1645.03, while the S&P 500 gained 1.03 points, or 0.1%, to 995.73.

"Because of contracts expiration, it turned out to be a nothing day," said Alfred Kugel, chief investment strategist at Stein Roe Investment Counsel, in Chicago. Friday was a so-called quadruple witching, or expiration of various options and futures.

"We've had a big move since March, so some consolidation is normal. But bears haven't been able to put it down for more than a day or two at a time, so I'm betting stocks will follow through with gains," Kugel said.

Quadruple witching kept volume high, with about 1.7 billion shares traded on the NYSE and the same amount on the Nasdaq. Decliners were slightly ahead of advancers in both exchanges.

The Dow has risen 22% from its 2003 low on March 11 amid expectations of stronger economic prospects in the second half of the year. The S&P has gained 24%, while the Nasdaq has jumped almost 30% in the same period. For the week, the major averages all closed with gains. The Dow rose almost 1%, while the S&P climbed 0.7% and the Nasdaq gained 1.1%.

Treasuries fell, with the yield on the 10-year note up 4 basis points at 3.38%. Investors were busy speculating about the Fed's move next week, and realizing that a rate cut could come in short of the 50 basis points many are expecting.

Kugel of Stein Roe said, "Either 25 or 50 basis points won't make a big splash in the market. What will matter is what they say, which I am guessing will be to imply they won't raise rates in the foreseeable future."

News on the corporate front was mostly positive. GM ( GM) said it plans to sell $10 billion in debt and convertible securities to finance part of its pension plans, which were underfunded by about $19 billion at the end of 2002. GM shares gained 49 cents, or 1.3%, to $38.56.

After losing 3% on a downgrade Thursday, GE ( GE) affirmed its second-quarter and full-year earnings guidance ahead of a presentation to analysts. Shares rose 14 cents, or 0.5%, to $30.

PeopleSoft ( PSFT) recommended that its shareholders reject Oracle's ( ORCL) sweetened takeover bid, citing a low premium and antitrust concerns, according to media reports. Earlier this week, PeopleSoft began its own $1.75 billion tender for J.D. Edwards ( JDEC), after Oracle raised its bid for PeopleSoft to $6.3 billion. PeopleSoft lost 11 cents, or 0.6%, to $17.50, while Oracle shares shed 38 cents, or 2.9%, to $12.96. J.D. Edwards shares were flat at $14.02.

Copier maker Xerox ( XRX) said late Thursday that it secured $3.46 billion in financing, about $360 million more than initially expected. The company will use the money to extend debt maturities and improve its finances in general. Xerox currently has $3.1 billion in outstanding bank loans. Shares ended down 5 cents, or 0.5%, at $10.35.

Oil services provider Halliburton ( HAL) said second-quarter earnings will be significantly lower than expected because of losses at an oil project in Brazil. The company also said asbestos claims increased, requiring additional cash to settle lawsuits. It failed to disclose the precise amount, but said the figure will be slightly higher than the initial $2.78 billion. Shares dropped $1.27, or 5.2%, to $23.16.

Homebuilder KB Home ( KBH) beat analysts' estimates in its quarterly earnings, and boosted its expectations for full-year profit, based on historically low mortgage rates. Nonetheless, KB shares lost $5.86, or 8.4%, to $64.10.

Among other preannouncements, Solectron ( SLR), a contract electronics manufacturer, said its quarterly loss will be wider than analysts had expected. Solectron shares fell 68 cents, or 15.5%, to $3.71.

Canadian software maker Cognos ( COGN) said earnings will fall short of Wall Street's forecasts because of the decline of the U.S. dollar. Cognos shares shed $2.23, or 7.5%, to $27.67.

Tibco Software ( TIBX) missed analysts' expectations after it reported a 4% decline in second-quarter earnings amid weak demand for its products. Tibco fell 63 cents, or 10.6%, to $5.33.

Overseas markets were mixed, with London's FTSE 100 up 0.5% at 4153 and Germany's Xetra DAX up 0.1% at 3251. In Asia, Japan's Nikkei closed 0.1% higher at 9120, while Hong Kong's Hang Seng fell 0.5% to 9930.

Crude oil prices for future delivery were up at $26.47 in London. The dollar was practically unchanged against the yen and stronger against the euro.

On Thursday, the Dow finished down 114.27 points at 9179.53. The S&P 500 fell 15.39 points to 994.70, while the Nasdaq shed 28.50 points to 1648.64.

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