Updated from 4:08 p.m. EDTStocks' recent seesaw act took a new twist Friday as Google's ( GOOG) huge quarter emboldened technology bulls, while the Dow Jones Industrial Average struggled with losses. The Nasdaq Composite closed with a gain of 14.10 points, or 0.68%, to 2082.21, reflecting a 12.1% jump in Google. The Dow, stuck with a 9.5% hammering in Caterpillar ( CAT), lost 65.88 points, or 0.64%, to 10,215.22. The S&P 500 gained 1.79 points, or 0.15%, to 1179.59. The Dow was down 0.7% for the week. The S&P 500 has lost 0.59%, and the Nasdaq gained 0.84% behind the strength of tech. "The market this week has been like watching a ping-pong match," said Paul Mendelsohn, chief investment strategist with Windham Financial. "We can sum this week up as a stock-picker's market. If you got the wrong stocks, you got beaten up. There's optimism on the up days and depression on the down days. I'm leaving this week wondering what the catalyst will be to really get us started." About 1.85 billion shares traded on the New York Stock Exchange, with advancers beating decliners by a 2-to-1 margin. Trading volume on the Nasdaq was 1.79 billion shares, with advancers outpacing decliners 3 to 2. Oil, whose 5% slide over the past three sessions has been a major contributor to the volatility in stocks, fluctuated around the $60-a-barrel level Friday before closing up 61 cents to $60.63. Still, crude prices fell 2.2% for the week. Unleaded gasoline was up 2 cents at $1.63 a gallon. Energy shares were hammered on Thursday by a more-than-$1 decline in oil, sending the Dow to a 133-point loss. "The leading group all year has been energy, so as the price of oil keeps falling, it hurts the averages," said Larry Wachtel, senior market analyst with Wachovia Securities. "That's the conundrum we're facing. If the money was shifting out of oil stocks into something else we'd be fine, but it doesn't seem to be going into any other sector." Michael Sheldon, chief market strategist with Spencer Clarke, says that "the recent decline in unleaded gasoline futures, if sustained, should lead to a drop in retail gasoline prices at the pump and could help boost consumer confidence in weeks ahead." In other markets, the 10-year Treasury was up 13/32 in price to yield 4.38%, while the dollar eased against the yen and euro. "With nothing on the economic calendar today, the bias was to go down in yields," said John Canavan, market analyst with Stone & McCarthy Research Associates. "Thin trading and a bullish technical situation, combined with improved psychology, gives a bias to the upside. As soon as we went down through the technical level of 4.42%, it spurred a lot of buying."
Sentiment in equities brightened after the bell Thursday when Google reported third-quarter earnings of $382 million, or $1.32 a share, up from $52 million, or 19 cents a share, a year earlier. On a pro forma basis, the Internet giant earned $1.51 a share on revenue of $1.05 billion. Analysts were forecasting earnings of $1.36 a share on revenue of $943 million. The earnings beat garnered 12 separate price-target boosts for Google, with some firms now expecting share prices to reach $450. Google was up $36.70, or 12.1%, to close at $339.90. More good news for tech bulls came from SanDisk ( SNDK), which said third-quarter earnings nearly doubled to $107.5 million, or 55 cents a share, on sales of $589.6 million. Analysts had been forecasting earnings of 35 cents a share on sales of $515 million. SanDisk gained $10.07, or 21.7%, to $56.45. Dow component Caterpillar posted third-quarter earnings of $667 million, or 94 cents a share, up from $498 million, or 70 cents a share, a year ago. Revenue climbed by 17% to $8.98 billion from last year. The Thomson First Call consensus was for earnings of $1.06 a share on revenue of $8.47 billion. The company said it's coping with a tight supply channel. Looking ahead, Caterpillar cut its fiscal 2005 outlook, now expecting EPS of $3.85 to $4, down from its prior outlook for a profit of $4 to $4.20 a share. For the fourth quarter, the company expects earnings of $1.01 to $1.16 a share on revenue of $9.6 billion. Caterpillar tumbled $5.11, or 9.5%, to $48.92. Telecom infrastructure giant Ericsson ( ERICY) said third-quarter earnings rose 22% from a year ago to $673 million, slightly below forecasts. The company reported shrinkage in its gross margin and guided full-year results in line with estimates. The stock was down 59 cents, or 1.8%, to finish at $32.61.
In what is expected to be the company's last earnings report, AT&T ( T) posted a third-quarter profit of $520 million, or 64 cents a share, after a year-ago loss of $7.1 billion, or $8.99 a share. Revenue fell to $6.62 billion from $7.64 billion a year ago. The Thomson First Call consensus was for earnings of 51 cents a share on revenue of $6.56 billion. AT&T also now expects full-year revenue of $26.5 billion, and it sees operating margins, excluding items, in the low double digits on a percentage basis. The company, which was acquired by SBC Communications ( SBC), was higher by 43 cents, or 2.3%, to $19.01. Oilfield services provider Schlumberger ( SLB) said third-quarter earnings surged 70% to $540.8 million, or 89 cents a share, on a 4% revenue gain. Excluding items, the company earned 86 cents a share, beating estimates by a penny. Shares lost 57 cents, or 0.7%, to $80.01. Broadcom ( BRCM) earned $132.7 million, or 35 cents a share, in the third quarter, compared with $43.9 million, or 13 cents a share, a year ago. EPS excluding items were 39 cents, beating estimates by 1 cent. Broadcom fell by $1.85, or 4.2%, to $42.45. Maytag ( MYG) swung to a third-quarter loss of $18.2 million, or 23 cents a share, compared with a profit of $7.5 million, or 9 cents a share, a year ago. Excluding a 2-cents-a-share charge related to the company's restructuring, Maytag would have posted a loss of 21 cents a share. Analysts were expecting a loss of 4 cents a share, according to Thomson First Call. Sales rose 6.5% to $1.26 billion from last year. Maytag was up 28 cents, or 1.6%, at $17.47. Xerox ( XRX) said third-quarter net income fell to $63 million, or 5 cents a share, down from $163 million, or 18 cents a share, a year ago. Excluding items, profit was 18 cents a share, matching the Thomson First Call average consensus. Revenue rose 1% to $3.8 billion. Xerox's board also initiated a $500 million share buyback program. Xerox gained $1.04, or 8.4%, to $13.45.
Drug company Wyeth ( WYE) reported third-quarter earnings of $869.9 million, or 64 cents a share, down from $1.42 billion, or $1.05 a share, from a year earlier. Excluding items, Wyeth earned $1.1 billion, or 81 cents a share, beating analysts' forecasts by 5 cents. Revenue rose 5% to $4.72 billion from last year, below estimates. Wyeth fell $1.23, or 2.7%, to $45. On Monday, earnings season continues with reports expected from Texas Instruments ( TXN), American Express ( AXP), Cendant ( CD), Merck ( MRK) and Kimberly Clark ( KMB). Among ratings moves, Goldman Sachs downgraded Ford ( F) to underperform from in-line, a day after the company swung to a third-quarter loss that was greater than expectations. The stock was lower by 17 cents, or 2%, to close at $8.25. European markets were lower following New York's drubbing on Thursday. In London, the FTSE 100 was off 0.4% to 5142, while Germany's Xetra DAX slipped 0.5% to 4838. In Asia, Japan's Nikkei gained 0.1% overnight to 13,200, while Hong Kong's Hang Seng added 0.6% to 14,488.