Banks Bruise Dow; Google Lifts Nasdaq

NEW YORK ( TheStreet) -- Stocks ended on a mixed note on Friday with strong earnings pushing tech stocks higher even as financials were hit by growing concerns over foreclosure moratoriums.

The Dow Jones Industrial Average finished lower by 32 points, or 0.3%, at 11,062. The S&P 500 gained 2 points or 0.2% to 1176. A 10% jump in Google ( GOOG) helped push the Nasdaq higher by 33 points, or 1.4%, to close at 2468.

The Dow managed to finish slightly higher for the week, as weakness in financials and an unexpected jump in jobless claims curbed investor enthusiasm for stocks.

Stocks initially traded higher on Friday after Federal Reserve Chairman Ben Bernanke reiterated that additional accommodation was coming, but did not offer fresh details.

In a speech at a conference on monetary policy in a low-inflation environment Friday morning, Bernanke said there is a "case for further action" but warned of "the uncertainties associated with the use of nonconventional policy tools." Nevertheless, he said the Fed remains committed to improving employment and price stability through policy action and said the Federal Open Market Committee is "prepared to provide additional accommodation if needed to support the economic recovery and return inflation over time to levels consistent with our mandate."

Brian Bethune of Global Insight said that Bernanke's statements held no surprises and is probably why the market largely dismissed his statements as old news, choosing instead to focus on earnings. "Bernanke is merely stating the obvious in a kind of erudite manner. It is pretty obvious that the current unemployment rate is too high. You can question if the inflation rate is as low as the Fed is suggesting but most people will agree when they go to Wal-Mart or make a deal with their auto dealer, that prices are flat. He has essentially consolidated market expectation that the Fed is going to take action," he said.

Bethune says that a move from the central bank in November is a foregone conclusion. "They (central bank officials) are locked and loaded. It is just a question of how much easing. William Dudley has already thrown the figure of $500 billion, so that could be the minimum we can expect," said Bethune. He expects that the central bank will probably allow itself enough flexibility to scale back its purchases as the economy improves.

Investors were greeted with a wave of positive economic data on Friday morning. Prices at the consumer level ticked 0.1% higher in September after rising 0.3% in August. The level was slightly below the 0.2% growth that economists had been anticipating, according to Briefing.com. The core rate, which excludes volatile food and energy costs, remained unchanged as it did in August, which was weaker than the 0.1% uptick that economists projected.

Meanwhile, retail sales rose 0.6% in September, exceeding expectations for an increase of 0.4% and coming in just below August's growth of 0.7%. Excluding autos, sales met economists' expectations for an increase of 0.4% after advancing 1% in August.

Manufacturing activity in the New York region strengthened in October as the Empire Manufacturing Survey came in at 15.73 from 4.10 in September. Economists, according to Briefing.com, had been expecting a reading of 5.75 from the New York Fed. The level far exceeded the reading of 5.75 that economists had projected, according to Briefing.com.

Consumer sentiment, however, slipped to 67.9 in October from 68.2 in September, according to the University of Michigan's preliminary look at consumer confidence. The market had been anticipating a slight increase to 68.5, according to Briefing.com.
Shopping

Business inventories increased 0.6% in August, which was largely in line with the 0.5% uptick that Wall Street had been anticipating. August's growth compares with July's jump of 1.1%.

The U.S. Treasury Department said its September budget deficit narrowed to $34.5 billion from the prior month's shortfall of $46.6 billion. That was in line with expectations. However, the budget deficit for fiscal year 2010 was the second highest on record at $1.29 trillion or 8.9% of GDP, only behind the $1.42 trillion shortfall reported in 2009.

"The economic data was much better than expected," said Art Hogan, chief market strategist of Jefferies. "It is not good enough to dissuade the Fed from to move away from quantitative easing but they may consider doing it more gradually in light of the better data," he said. Market attention will likely focus on earnings next week, according to Hogan, with 150 of the S&P 500 companies reporting numbers next week.

In earning news on Friday, General Electric ( GE) topped analysts' estimates with a third-quarter profit of 29 cents a share, although sales of $35.9 billion fell short of expectations. The stock shed 5% to $16.30.

Shares of Google ( GOOG) jumped 11.2% to $601.45 after it blew past profit expectations for $6.67 a share with third-quarter adjusted earnings of $7.64 a share. The strong performance pushed the Nasdaq higher with the PowerShares QQQ ( QQQQ) gaining 2.1%.

Gannett ( GCI) shares sank 8.8% to $12.85 after the media company's third-quarter results fell short of estimates. Third-quarter earnings rose 38% to $101.4 million, or 42 cents a share. Earnings from continuing operations were 43 cents, below analysts' estimates of 50 cents.

Mattel ( MAT) shares shed 6.5% to $22.45 after the toymaker said third-quarter revenue rose 2% to $1.83 billion instead of the $1.94 billion analysts had expected.

Shares of Seagate Technologies ( STX) skyrocketed 22.2% to $15.51 after it said that it might consider going private.

Warren Buffett's Berkshire Hathaway ( BRK.A) continues to offload more of its stake in Moody's ( MCO), having sold 2 million shares since the beginning of September. The stock of Moody's was down 0.6% at $26.50.

Hawk ( HWK) agreed to be acquired by Carlisle Cos. ( CSL) for $50 a share, or $413 million. The stock was up 2% at $50.01.

Hewlett Packard ( HPQ), Microsoft ( MSFT) and Cisco ( CSCO) led other Dow components up 1.6%, 1.3% and 1.2% respectively.

Shares of financials remained under pressure, as investors worried about the impact of foreclosure moratorium on the earnings of big banks. Shares of JPMorgan Chase ( JPM) fell 4% to $37.15 and Bank of America ( BAC) shed 4.9% to $11.98.

Rating agency Moody's said MetLife ( MET) was delaying the sale of some foreclosed properties and had found irregularities in its foreclosure procedure. The rating agency said MetLife Home Loans may see its servicer-quality grade cut. Shares of MetLife lost 1% to $39.22.

Chinese solar stocks were down sharply after the U.S. opened an investigation into China's aid to its clean energy producers following a complaint by an American labor group that said the country was following unfair trade practices. LDK Solar ( LDK) sank 4.2% to $12.12, Trina Solar ( TSL) shed 8.9% to $27.87 while SunTech Power ( STP) skidded 5.9% to $9.42.

Commodity markets were weak on the back of a stronger dollar. November crude oil lost $1.4 to settle at $81.25 a barrel while the December gold contract shed $5.6 to settle at $1,371.10 an ounce.

Meanwhile, the dollar traded higher against a basket of currencies with the dollar index up by 0.6%. The benchmark 10-year Treasury note fell 17/32, lifting the yield to 2.567%.

Overseas, Hong Kong's Hang Seng slipped 0.4% and Japan's Nikkei lost 0.9%. The FTSE in London shed 0.6% while the DAX in Frankfurt closed higher by 0.6%.

--Written by Melinda Peer and Shanthi Venkataraman in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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