Stocks ended mixed Friday, with banks rallying after Congress finally settled on a financial-reform bill. For the week, though, stocks lost 2.9 percent, led by energy.
The Dow Jones Industrial Average ended down 8.99, or 0.1 percent, at 10,143.81 today, while the S&P 500 and Nasdaq ended higher. The CBOE volatility index, widely considered the best gauge of fear in the market, dropped below 29 but was still higher than where it ended last week, at 23.88.
Banks rallied after Congress reached a deal on financial reform, with Bank of America , JPMorgan and Goldman Sachs all up more than 2 percent.
"In the short term, there is not a lot of impact at all," Anton Schutz president of Mendon Capital Advisors, told CNBC of the financial-reform bill. "[E]arnings are not going to be dramatically affected and some of the banks stocks are "very cheap," said Schutz.
The legislation, now called the Dodd-Frank bill, now goes to the full House and Senate for a vote and could be signed into law by President Obama by July 4.
The bill waters down Dem. Sen. Blanche Lincoln's proposal to make banks spin off their swaps-trading desks after several lawmakers threatened to vote against the legislation on the grounds that such a provision would force trading overseas. The compromise allows banks to
The compromise allows banks to stay involved in foreign-exchange and interest-rate swaps dealing, which account for the bulk of the $615 billion over-the-counter derivatives market.
Investors got some mixed signals from the day's economic data: Consumer sentiment rose to its highest level since January 2008, while first-quarter GDP was revised lower. Corporate profits, meanwhile, were more than double the prior estimate, rising 5 percent.
Retailers were mixed as the consumer sentiment data improved, but Rochdale analyst Dick Bove warned that the financial-reform bill will likely hurt consumers.
For the week, consumer discretionary was among the worst performers, down 5.3 percent, while staples fared slightly better, down 3.5 percent.
With earnings season approaching, some pros warned that results may be disappointing.
“We see some further growth, but that growth will decelerate as the easy comparison period is starting to go away,” said Alan Gayle, senior investment strategist at Ridgeworth Investments. “The economic environment ahead appears to be more challenging so we might be losing some momentum as we go into the second half of the year.”
Tech stocks were weak after a disappointing earnings report from Research In Motion.
Research In Motion skidded more than 10 percent after the BlackBerry maker missed its sales target amid increased competition from rivals like Apple.
Apple slipped despite an upgrade: Oppenheimer raised its price target on the stock to $345 from $320, with an "outperform" rating.
Oracle, however, rose 2 percent after the company beat earnings expectationsas sales of new software rose. S&P Equity raised its rating on Oracle to "strong buy" from "buy."
Homebuilders were also lower after KBHome reported a wider-than-expected loss.
Earlier this week, several analysts offered optimistic views on the homebuildersfor the second half of the year, saying the sector can only go up from here despite disappointing existing-home salesand new home sales numberson Tuesday and Wednesday, respectively.
Gold gained about $10 today to close at $1,256.20 an ounce, but that was down about $2 from where it ended last week.
Most gold miners including Barrick Gold and Newmont Mining were up more than 2 percent.
Oil rose to $77.18 a barrel, up nearly 5 percent from last week, while the dollar fell against the euro and other currencies.
BP shares dropped 6 percent amid worries about the rising cost of the oil spill.
Twenty-five Dow components finished lower this week, including oil giants ExxonMobil and Chevron, tech giants Microsoft and Intel, and GE. Five components finished higher: American Express, Boeing, Alcoa, Merck and JPMorgan.
European markets fell for a fourth session after European Commission President Jose Manuel Barroso said Europe has no more room to spend through increased budget deficits, stressing fiscal consolidation was necessary to rebuild confidence for growth.
Meanwhile, the Russell 1000 index is seeing the biggest dollar trading volumethis year since 2007 ahead of its annual rebalancing after the market close today.
That created some heavy trading volume, with nearly 2.6 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 11 to 4.
With today's losses, the Dow and S&P are on track for their worst quarter since the first quarter of 2009, when they lost 13.3 percent and 11.7 percent, respectively. It's even worse for the Nasdaq, which is on track for its worst quarter since the fourth quarter of 2008, when it fell 24.3 percent.
On Tap for Next Week:
MONDAY: Personal income and spending
TUESDAY: Case-Shiller home-price index; consumer confidence; Tesla IPO expected
WEDNESDAY: FCIC hearing; weekly mortgage apps; ADP employment survey; weekly crude inventories; Fed's Lockhart speaks
THURSDAY: Weekly jobless claims; ISM manufacturing index; construction spending; pending-home sales; June auto sales
FRIDAY: June jobs report; factory orders
TBD: GM IPO
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