Updated from 4:20 p.m. EDTTech stocks rebounded and led the broader market higher Friday as traders put the previous day's losses behind them. The Nasdaq Composite rose 33.48 points, or 1.21%, to 2805.68, and the Dow Jones Industrial Average gained 77.96 points, or 0.56%, to 14,093.08. The S&P 500 added 7.39 points, or 0.48%, to end at 1561.80. "There was a little of everything for the bulls today, between good economic numbers, M&A coming back into the picture, and corporate earnings," said Peter Cardillo, chief market economist with Avalon Partners. "This has increased momentum buying." Cardillo warned, though, that "the real earnings onslaught will hit next week and will be more of a focus, although it could end up cutting into the enthusiasm due to disappointments." Breadth was decidedly positive to end the week. On the New York Stock Exchange 2.72 billion shares changed hands, as advancers topped decliners by a 5-to-3 margin. Volume on the Nasdaq reached 1.96 billion shares, with winners outpacing nearly 3 to 2. Indices notched their fifth winning week in a row. The Dow tacked on 0.2%, the S&P 500 climbed 0.3%, and the Nasdaq ended up 0.9% for the week. Last time out, blue-chip averages hit new record intraday levels before an unraveling in tech stocks dashed gains. The main culprits included Baidu.com ( BIDU), Research In Motion ( RIMM), SanDisk ( SNDK) and Amazon.com ( AMZN), all of which fell at least 5% Thursday. The tech-heavy Nasdaq ended sharply lower by 39.41 points, or 1.4%, to 2772.20. The Dow swung in a range of more than 200 points but ultimately fell 63.57 points, or 0.45%, to 14,015.12. McDonald's ( MCD) helped start the new session on a positive note after projecting third-quarter earnings above analysts' expectation. The fast-food restaurant chain now expects a profit of 83 cents a share on a continuing operations basis, ahead of Wall Street's 77-cent estimate. Shares advanced 77 cents, or 1.4%, to $57.02. Fellow Dow component General Electric ( GE) closed lower after the industrial giant reported its third-quarter earnings. On a continuing operations basis, GE recorded a profit of 50 cents a share, matching estimates. The company also reiterated its full-year guidance. Still, GE was off 57 cents, or 1.4%, to finish at $41.03.
Also on the Dow, Citigroup ( C) ended down after Deutsche Bank downgraded the stock to sell from buy, cutting its stock price target to $44 from $60 a share. The downgrade comes a day after Citigroup said it will marry its investment banking and alternative-investment operations into a single business. Citigroup shed 45 cents, or 0.9%, to $47.87. Among other analyst actions, Morgan Stanley raised its price target for Apple ( AAPL) to $180 from $150, and Oppenheimer was the latest to bump its price target for Google ( GOOG) higher. The firm raised its target to $700 from $625. Shares of Apple advanced $5.02, or 3.1%, to $167.25, reversing the previous session's decline. Google shares ended up $15.39, or 2.5%, to $637.39. Tech stocks were also bolstered by news that software giant Oracle ( ORCL) offered to acquire BEA Systems ( BEAS) for $6.7 billion, or $17 a share. The bid represents a 25% premium to BEA's closing price Thursday. Shares of BEA surged 38% to $18.82, after the company said the offer is too low, suggesting investors are betting on a better price. The housing sector was under pressure after Wachovia lowered 2007 and 2008 earnings estimates for 13 homebuilders, noting escalating cancellation rates and ineffective promotions. Among those cut were Centex ( CTX), Beazer Homes ( BZH), Lennar ( LEN), Toll Brothers ( TOL), Hovnanian ( HOV), and D.R. Horton ( DHI).
The Philadelphia Housing Sector Index slumped 1.2% as each of the housing stocks fell by 2.5% or more. Traders also had to contend with a new round of economic data. A day after chain stores posted same-store sales results for September, the government said that retail sales rose 0.6% last month, tripling expectations. Excluding autos, retail sales increased 0.4% in September, also topping expectations. Ian Shepherdson, chief economist with High Frequency Economics, said that the retail sales report is actually weaker than it appears. "Our measure of core, which excludes food, gas and autos, rose a mere 0.1%, following a 0.1% decline in August," he said. "If, as we expect, October sales are more or less flat too, this would mark the softest three-month patch since the spring of 2003, during the invasion of Iraq." At the same time, the Labor Department said the September growth for its producer price index came in at 1.1%, much hotter than the expected 0.5% rise. The core number, which excludes food and energy, advanced 0.1%, below consensus. Also on the economic docket, the University of Michigan said its consumer sentiment index eased to a reading of 82.0 in October from 83.4 last month. Additionally, the government said that business inventories inched 0.1% higher in August, below expectations. Commodity prices ended mixed. Crude oil jumped past $84 for a time and finished up 61 cents to $83.69 a barrel, a new closing high. Gold futures were down $2.90 to $753.80 an ounce, and silver fell 8 cents to $13.90 an ounce. Treasury prices were lower following a choppy session. The 10-year note was off 11/32 in price, pushing the yield to 4.68%. The 30-year bond was down 21/32 to yield 4.91%. Overseas markets were mixed. In Asia, Hong Kong's Hang Seng shed 1%, and Japan's Nikkei 225 lost 0.7%. In Europe, London's FTSE 100 and Germany's Xetra Dax tacked on 0.1%.