Dow Watch: Tepid Ending to Week

(At 4:35 p.m. EDT)

There was a heck of a lot of action today, but ultimately the Dow walked away Friday with a gain of only 17 points, finishing at 9171.61, a new closing high for 2009.

The index eked out a gain despite a few of negative headlines, including Disney's ( DIS) disappointing second-quarter top-line results and negative revisions to gross domestic product for the first quarter.

Bank of America ( BAC) and Travelers Companies ( TRV) were the best of 17 winning Dow stocks Friday, rising 5.9% and 2.7%, respectively. Chevron ( CVX) overcame choppy trading to start the day to finish up 2.6% after its mixed earnings report.

We've had big gains on the index over the last few weeks, but the action of the Dow the past two sessions is worrisome. Thursday and Friday's session finished with gains, but those advances were halved in the last hour of trading. That's not a good sign if you're a bull looking for some buying conviction.

Things will only get more interesting next week, as traders will shift their focus from earnings to economic data. Three Dow components will report quarterly results next week -- Kraft ( KFT), Procter & Gamble ( PG) and Cisco Systems ( CSCO) -- but for all intents and purposes, this earnings season is over.

The big economic data report is Friday's nonfarm payrolls number, which should show that the U.S. economy lost 333,000 jobs for the month of July. In addition, we'll get separate reports from the Institute for Supply Management on manufacturing and services. We'll also receive personal income and spending, pending home sales, and factory orders data throughout the week.

With that warning, I'll leave you with best wishes for a wonderful weekend.

(At 11:50 a.m. EDT)

NEW YORK ( TheStreet) -- The Dow Jones Industrial Average has zigzagged in and out of positive territory Friday, the last trading day of July, falling by as many as 21 points and rising by as much as 62 points within the first hour of trading.

The Dow was simultaneously bolstered by gains in Travelers Companies ( TRV) and Bank of America ( BAC) and pressured by losses in Disney ( DIS) and Exxon Mobil ( XOM). This has given us the uneven movement on the blue-chip index Friday.

Disney shares were down 3.3% after the House of Mouse disappointed with top-line results late Thursday. While Disney reported fiscal third-quarter earnings of 52 cents a share, a penny better than Wall Street's consensus, revenue slid 7% from a year ago to $8.6 billion. That was short of the Thomson Reuters average estimate of $8.8 billion. Disney said the latest quarter was impacted by weak advertising sales at its television stations.

BofA, meanwhile, rose 2.5% on news that it is planning to set up a wholly owned banking unit in China. Reuters reported that BofA will use this China-incorporated unit to focus on corporate lending and investment banking activities, citing people familiar with the situation.

Travelers was also a top performer on the Dow, one day after the insurer posted second-quarter earnings results that missed estimates. Travelers did up its full-year earnings guidance, although the new range of $4.80 to $5.05 a share was still below the consensus estimate of $5.17 a share. While the stock fell 1.6% Thursday, it rebounded Friday, climbing 2.2% to $42.84.

Much like the Dow itself, Chevron ( CVX) bounced around the flatline Friday after the company reported second-quarter earnings of 87 cents a share, below the consensus target of 95 cents a share, according to Thomson Reuters. However, revenue tumbled by 51% to $39.65 billion, coming in ahead of the $33.41 billion analysts had forecasted.

The Dow was also taking a cue from the latest report on gross domestic product. The advance read second-quarter GDP showed the economy shrank by only 1%, better than the 1.5% decline economists had widely expected. However, first-quarter GDP was revised lower to a decline of 6.4% from the previous slide of 5.5%.

Ian Shepherdson, chief economist with High Frequency Economics, had more bad things to say about the GDP report. "The surprise in Q2 GDP is consumption, down 1.2%; we had expected only -0.2%," he wrote in an email. "Services and durable goods look to have been weaker than prior monthly data suggested."

The latest read on the employment costs index wasn't helping either, Shepherdson said. While the index rose 0.4% in the second quarter, a little higher than consensus, Shepherdson is concerned that the quarterly rate of increase in the ECI has clearly stepped down in the past two quarters.

"Both wage and benefit increases have halved over the past year, in year-over-year terms, reflecting the surge in unemployment and corporate non-wage cost cutting," Shepherdson wrote. "As long as this lasts it is very hard to see anything but downward pressure on core inflation."

Fortunately, Shepherdson said that the apparent surge in car sales thanks to the "cash for clunkers" program could make for a positive GDP number in the third quarter. It's a good thing that Congress is scrambling to pour more money into the program, as it burned through $1 billion in its first six days.

-- Written by Robert Holmes in New York.

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